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nn, Sir Ernest John 


The trade of to-morrow 


New York 










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Benn, Gir Ernest John Pickstone, bart., 1875- 
The trade of to-norrow, by Ernent J.P.Benn... 

New York, Dutton, 1918. 
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Columbia SInttiem'tp 



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Author of "Trade as a Science." 






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A FRIEND, who has been good enough to read my 
manuscript, and whose judgment on these matters 
is better than mine, complains that this book gives 
the impression that I am interested only in material 
prosperity. I insist all through on the necessit}^ 
for production, and appear to argue that the mere 
multipHcation of things is in itself a measure of 
human progress. 

This criticism, which is perfectly just, prompts 
me to insert this note, and to say that I should 
be sorry even to appear to believe that human 
development depended entirely, or even chiefly, 
upon material progress. I am fully conscious that 
right through this book I lay imdue emphasis 
upon quantity, more production, an emphasis 
which I think is justified in view of the urgent need 
of the nation for the creation of wealth. It will, 
however, be obvious to the thoughtful reader 
that Trade Councils constituted in the way here 
suggested will give great opportunities for the pro- 
motion of the human, the artistic, and the quality 
sides of industry. 

It will, further, be evident that such Councils 



could settle the underlying problems of the labour 
difficulty, which the Observer calls a spiritual 
revolt. They would place the workman on an 
equal footing with the master in the supreme 
control of industry, while interfering in no way 
with the independence of either. 

But having said so much, I do contend that there 
is a pressing need for greater attention to the sordid 
side of progress with which I deal in this book. 
There has in the past been far too much preaching 
of high ideals without regard to worldly needs, a 
fact which explains the comparative failure of all 
ethical appeals to the multitude. Social reformers 
of every kind would find better ground for their 
work if the material inadequacies of our present 
arrangements could be eUminated. 

E. J. P. B. 

8. BouvERiE Street. E.C. 
July, 19 17. 




author's note 






































s? X. 

LABOUR - - - 



s XI. 




^ XII. 




^ XIII. 





MERGE - - - 




















EXPORT - - - 

















The Trade of To-Morrow. 



" Get a really new world." — Lloyd George. 

Frankly, the subject to which I have the temerity 
to return is overwhelming. It is not one subject 
at all : it comprises a thousand separate subjects. 
Every point in it is full of controversy, and little 
that one can say has any hope of finding general 

Yet my mission is a very simple one. It can be 
expressed in a sentence. It is to plead for the 
organisation of the trades of this country in such 
a way that the three parties interested — (i) The 
State, (2) the workman, (3) the capitalist — may be 
able together to develop them to their fullest extent. 

The first question which arises is this : Why 
bother to organise trade at all ? We have done 
very well in the past, and why not leave things 
alone ? 

There are many reasons why improvements must 




be made, some of them immediate and passing, 
others fundamental and more important. 

Among the former are such matters as : 
Raising revenue ; 
Repairing the wastage of war ; 
Providing work for all upon demobilisation ; and 
Foreign competition. 

But among the fundamental and more important 
considerations to be reckoned with are these : — 

The increasing needs of the population demand 
more goods, and the march of civilisation demands 
less work, and the two can only be secured by better 

It is one of our elementary duties to see that in 
our industrial scheme there is as little waste as 
possible either of material or effort. 

Trade is a very large subject, far too complex 
for any one mind to grasp properly. It is a subject 
where one can very easily become lost in detail. 
The problems of trade cannot be solved by a few 
deputations to Ministers, or even by the hundreds 
of committees which the Government are reported 
to have appointed. They call for the estabUsh- 
ment of powerful and permanent machinery, 
conceived upon a big plan. Industry should be 
admitted to a place in the Constitution. 

There are 28,678 local authorities in the United 
Kingdom to attend to sewers, cemeteries, street 
lighting, and other such details. The control of 
our trade is surely worth at least as much 
attention. In these pages my object is to help 



in promoting the organisation of our trades under 
the protection of the State. 

In developing my argument for representative 
Trade Unions, Trade Associations, and Trade 
Councils, I shall refer to a variety of subjects, not 
in order to express any opinion about them or influ- 
ence the discussion of them in any way, but simply, 
and I think this is, forthe moment, more important, 
to show that they cannot be satisfactorily handled 
or discussed until our trades are made articulate, 
are given a corporate existence and a voice, which 
is not the case to-day. 

In inviting attention, therefore, to such questions 
as output, foreign competition, tariffs, labour, 
wages, profits, exportation, economical production, 
or any of the numerous aspects of the trading 
problem, I do so, not to dogmatise upon them, but 
only to insist that these problems are not capable 
of solution by politicians or newspaper writers, 
and to emphasise the need for the creation of the 
proper authorities to deal with them. 

The development of industry sounds simple 
enough, and is simple enough if suitable machinery 
is secured for the purpose. The problem is easiest 
in its broadest aspect : it is in the details that it 
becomes embarrassing. We decide to multiply by 
ten our output of shells, and a paper plan is made 
in a few minutes ; but in practice it requires as 
many hotels, offices, and hutments as would make 
a respectable city, and a Defence of the Realm Act, 
and a series of Munition Acts to boot. Presently 





we shall require to multiply our output of more 
peaceful commodities, and there will be no Acts 
to help us. What plan can we, therefore, adopt ? 
What are the ways and means that are necessary 
to effect our object ? 

When the war is over we shall be faced with the 
necessity of raising to its highest point the produc- 
tive capacity of the nation. That is a proposition 
which nobody will deny. Every citizen, worthy of 
the name, will require to feel assured that he or she 
is contributing the maximum possible to the relief 
and removal of the burdens which the war has put 
upon us. According as we arrange ourselves well 
or badly, so will the results of our individual efforts 
be great or small. 

General statements of this kind are easy, and if 
the writing of platitudes and the expression of 
pious hopes could effect the salvation of the country 
and the Empire, then surely every Briton must feel 
perfectly happy and safe to-day. As, however, this 
is not the case, it becomes necessary to do something 
— and that is when the trouble begins. A thousand 
voices are endeavouring to explain at the same 
moment. Each voice has a message, each is worthy 
of a hearing, but among " the tumult and the 
shouting " all are ineffective. 

In the endeavour to gain a hearing amid such a 
babel, I propose to adopt an unorthodox method 
of argument. 

I start with my conclusions. These can be stated 
quite briefly and plainly, and when the reader has 

studied the next few paragraphs he will have 
gathered the gist of all I have to say. The rest of 
the book is mere " chatter," " chatter," which I 
venture to hope many may find of interest, upon 
some of the thousands of issues raised by this enor- 
mous problem of trade, industry, and production. 

The chatter is intended to lead the reader to 
think, as I do, that the subject is too complicated 
and the interests involved are too ^eat for any 
Government to attempt to handle, and that the 
only thing the Government can do is to adopt a bold 
scheme of devolution. The control of industry must 
be delegated to authorities in each trade. 

British trade is capable of indefinite expansion. 
This is impossible on 1914 lines and equally impos- 
sible on the lines that we have adopted since 1914, 
great central Government schemes run by ofiicials. 
It depends upon a proper balancing of the various 
forces engaged, the workman, the capitalist, the 

Throughout this book I constantly refer to three 
parties concerned with industry. The rough divi- 
sion into three is convenient, although it would be 
more correct to subdivide further and speak of 
(i) the consumer, (2) the nation, (3) the workman, 
(4) the salesman, (5) the management, (6) the 
employer, (7) the capitalist. All these parties 
require special classification and separate treatment 
in any finished scheme. 

In the ordinary way some apology and explana- 
tion would be necessary for the production of two 

\ 1 1 ( 1 

I i; 





books on the same subject within the period of a 
year. " Trade as a Science," while it covered, so 
far as the details of the subject are concerned, a 
different ground for the most part from this present 
volume, yet contained the same arguments and had 
the same purpose. But, having regard to the 
importance of the subject and also to certain develop- 
ments which will be apparent to the reader in the 
writer's views and plans, there is perhaps sufficient 
excuse for this further intrusion into the debate. 

Since the publication of "Trade as a Science," 
some scores of books have appeared, and numbers 
of schemes have been put forward in the effort 
to help along the reconstruction through which we 
are passing. It is no disparagement to any of these 
to say that most of them are concerned with what 
I regard as the details of the problem, and all serve 
to emphasise the view here advanced, that the 
only way for the nation to deal with the matter is 
to adopt some great scheme of decentralisation and 
set up in this way adequate machinery to under- 
take so enormous a task. 

The following is, therefore, in bare rough outline 
the machinery which the present writer suggests 
as necessary. 

(i) A Minister of Commerce and Industry. 

A Minister of Commerce should be appointed for 
the purpose of fostering and facilitating the self- 
advancement of British Trade. 

To ask for another Minister at a moment when we 

are so overburdened with this type of functionary 
requires a very strong case, but that case is self- 
evident when it is remembered that in the whole 
crowd of statesmen who now look after our welfare 
there is not one who accepts any real responsibihty 
for such matters as output, export, economical 
production, science in industry, or education as 
applied to trade. 

The duties of the Minister of Commerce would be 
chiefly concerned with the setting up of Trade 
Councils within the different industries, and the 
regulation and assistance of these bodies when 

(2) Trade Councils. 

There should be created in connection with every 
industry a Trade Council to which the Government 
would delegate every question connected with that 

These Councils would relieve the Government of 
all details, in the same way that the County Councils 
undertake the detail work connected with their 
localities. They would be statutory bodies having 
a similar status to the County Councils. Powers 
should be conferred upon them from time to time 
by Act of Parhament or Orders in Council, placing 
in their hands necessary work as it arises, in exactly 
the same way that powers are now conferred upon 
local authorities as new needs come to light. 

These Trade Coimcils should consist of elected 
representatives of the Trade Associations and the 

m ' 





Trade Unions, one-third of the members being 
drawn from Q^ch source, as explained below. The 
remaining third would be composed of the official 
element, representatives of Government depart- 
ments, men of science, and nominees of other 
bodies having an interest in the trade. 

(3) An Industrial Franchise. 

The one weak spot apparent in all attempts to 
deal with trading matters is the absence of repre- 
sentative responsibility. This point will be argued 
later. It can be overcome by an extension of 
the franchise to cover trading interests. Every 
citizen now has the ParUamentary vote and the 
municipal vote, and he should be given in addition a 
trading or industrial vote. This vote would be 
available for use in connection with a Trade Union 
or a Trade Association. Thus each man and woman 
would have a direct voice in the three great branches 
of national administration : (a) Imperial Govern- 
ment, (6) Local Government, (c) Industrial Govern- 

(4) The Trade Union. 

The introduction of a new electoral principle as 
explained above would give to every working man 
the right to be a voting member of some Trade 
Union, and the principle of compulsory membership 
of a union, over which labour has fought so strenu- 
ously in recent years, would thus receive a measure 
of acknowledgment. The unions themselves would 



secure a semi-official status which need not in the 
least degree interfere with their independence. The 
Trade Union of an individual industry thus estab- 
lished upon a comprehensive and thoroughly repre- 
sentative basis, would elect periodically its share 
of the members of that industry's Trade Council. ) 

(5) The Trade Association. 

In exactly the same way as with the Trade Union, 
r the Trade Association would receive a measure of 
State recognition, and every employer in a particular 
industry would have the right of membership or a 
right to vote in connection with the affairs of the 
association. This need not necessarily mean full 
membership of the association. The Trade Associa- 
tion could continue as at present to undertake special 
work which interested full subscribing members, 
but it would assume a larger responsibility towards 
the whole industry. The full body of electors in 
that industry would have the right to vote in the 
affairs of the association so far as they concerned 
public functions put upon that association. These 
associations would then elect their proportion of 
the members of the Trade Councils. 

The creation of machinery on some such lines as 
these would provide the State for the first time with 
a means of ascertaining the views of the industry. 
It would also provide industry for the first time with 
a means of making its voice heard. It would remove 
from the sphere of politics dozens of questions which 
are domestic trade questions and not matters for 



Imperial Parliament. It would enable the State, 
through its Minister of Commerce, to take an active 
interest in and a proper responsibility for the 
development of each industry. It would, in my 
judgment, give an impetus and a strength to trade 
and industry which is all that is necessary to enable 
it to meet the unprecedented burdens put upon the 
country by the war, and which must be met in the 
long run by the trading community. 

This book is not a treatise on economics. The 
only argument in it is an argument for the admission 
of industry to a place in the Constitution and its 
organisation upon a representative basis. It comes 
into the class of propagandist literature and expresses 
the somewhat incoherent views of that peculiar 
creature commonly known as the " business man." 
It will probably create a condition of confusion in 
the mind of the reader, and in that way wiU serve 
one of its objects. If it helps to show how confused, 
complicated, and immense are the problems of 
industrial development, it will strengthen the argu- 
ment for decentralisation, devolution, and delega- 
tion. It is for the economists and politicians to 
study and criticise these proposals. 



Starting with the Reconstruction Committee of 
the Cabinet, there are literally hundreds of bodies 
debating and discussing the problems of reconstruc- 
tion, and it may not, therefore, be out of place to 
put down a few of the leading considerations which 
all these people should have constantly before them, 
if their conclusions are to be of any value. 

Some folk, especially those who have enjoyed a 
brief spell of authority— and these are tens of 
thousands — have become so used to war conditions 
and methods as to forget that this is the land of 
liberty. It is well to remind such that, when the 
needs of war are passed, this old country will not 
tolerate a continuation of anything in the nature 
of the numerous permits, controls, exemptions, 
licences, prohibitions, and badges, to which the 
ordinary civilian has willingly submitted since 1914. 

In order to defeat Prussian militarism we have had 
to adopt most of the evil methods against which we 
are fighting. We are subject not only to miUtary 
despotism, but to a far worse civil despotism, which, 





nevertheless, we welcome as a means of winning the 
war. But if all the little Jacks-in-office who now 
control us imagine that their power will last when 
the war is over, they are mistaken. The nation 
has had enough forms to fill up and enough returns 
to make to last it for many years to come. 

Most of the new ministries, which have sprung up 
like mushrooms, must come to an end when the 
transient need has passed. A cursory glance at 
the construction of these bodies is sufficient to prove 
this. The Prime Minister appoints some well-known 
man as, let us say, Minister of Building. Fifty 
leading architects and builders— recognised experts 
— immediately offer their services. An organisa- 
tion has to be improvised within a few weeks. The 
Charity Commissioners, the Governor of the Isle 
of Man, the King's Proctor, the Duchy of Lancaster, 
and the Lee Conservancy Board kindly lend the 
services of some of their dereUct officials, and in 
order that the new office may live up to all the best 
traditions of red tape the Steward and Clerk of 
Halemotes of the County Palatine is installed as 
"Establishment" Officer. 

These persons then proceed to appoint a thousand 
clerks and messengers — a thousand is always the 
minimum. When they have exhausted the appU- 
cants with influence the public swarms in. There 
is no examination, no test of quahfication. With 
this motley crew the Minister of Building manages 
somehow to accomplish the task for which he was 
appointed. The work costs five times as much as 


it is worth, hardship and injustice are scattered 
broadcast, blunders innumerable are made — but 
we are at war, and this sort of thing is the best we 

can do. 

As soon as the rush of work connected with the 
Building regulations is over, the army of officials 
in the Hotel Royal begin to think of the future. 
The quarters are pleasant, the pay is good, the work 
unexacting, and the taste of power deUcious. So a 
Reconstruction Committee is set up to prepare 
great schemes for the futiure. But when the war 
is over the fifty leading experts, who are mostly 
giving their services, will hasten back to their own 
affairs, and the brains and push and energy of the 
Ministry will be gone. This, of course, does not 
worry the professional official in the least : he will 
be glad to see the back of these hustling persons, 
so that he can establish himself and his minions 
behind a permanent parapet of forms and jackets, 
minutes and memoranda, imprests and precedents, 
all, of course, in triplicate. 

Let us reconstruct by all means. Indeed, if we 
are to live, we must reconstruct, but at all costs the 
fatal blunder must be avoided of construction upon 
the flimsy foundation of improvised war-time make- 
shifts. All these hurriedly conceived and badly 
constituted Ministries, ControUerships, and Director- 
ates must be swept clean away, and if good is to be 
done a new start made upon surer and more solid 

" We are living," says a leading manufacturer. 


" under a condition of State interference such as no 
man dreamed of as possible before the war. Bureau- 
cracy as we have got it to-day. and as it will remain 
after the war, is going to be a terrible danger unless 
controlled. Employers and workpeople are all 
gomg to be the slaves of the official." i 

" There is a danger which threatens freedom in 
the demand that the State should step in and take 
charge of branches of industry. . . . These are 
Prussian methods. We. as Liberals, desire to pre- 
serve mdependence and individuality."* 

The latter-day alliance between Prussianism and 
Socialism is one of the most remarkable phenomena 
of these extraordinary times. Let us be quite clear 
that we want Reconstruction in order to repair the 
ravages of war, and to equip us the better for the 
march of progress, but not for the purpose of per- 
petuating the millions of war jobs which we have 
had to create in the last three years. 

To the present writer this point is of great import- 
ance, because the scheme here suggested and already 
outlined in " Trade as a Science " involves the 
appointment of many thousands of trade officials 
and unthinking critics have been inclined to over- 
look the essential difference between a clerk in 
Whitehall and an expert trade commissioner in 
Pekin, and to dismiss the scheme with the old sneer 
-— " Another army of officials ! " 

v1a^'\-^'''^'^'\^Z''?^' *' Bradford and District Manufacturers' 
Federation, April i6th, 1917. "uJHciurers 

2 Viscount Bryce at the National Liberal Club, March 29th, 191 7. 


For this reason I desire to put great emphasis 
upon the absolute necessity of wiping out at the 
earliest moment all war-time civilian appointments. 
The holders of these posts have no claims on the 
nation. The soldier will be demobilised without a 
second consideration, and there is no reason why 
the man who has preferred to do his fighting in 
Westminster instead of Mesopotamia should have 
any greater claim to continuity of employment. 
He has enjoyed the market rate of pay, the soldier 
has not. He has in most cases derived material 
advantage from the war. Where there has been 
sacrifice it has been on the lowest scale and he should 
be the first to go. 

If it is essential that in a few cases these jobs must 
be perpetuated, then nine times out of ten there are 
better men in the Army who have stronger claims 
than the present occupants. It is, of course, obvious 
that here and there a piece of war work may have 
a permanent value and its continuance may be 
highly desirable, but such considerations must come 
from outside and not from inside. There must be 
a definite demand from independent sources, and 
little or no weight must be attached to schemes 
which come from interested inside parties. 

Another fundamental consideration which Would- 
be Reconstructors should carefully study in attempt- 
ing to apply war-time experiences to peace conditions 
is connected with the office of the Censor. Since 
1 914 the Government of the country, both civil and 
military, has enjoyed an immunity from press 




criticism which is unprecedented. Two causes have 
brought this about : first, the Defence of the Realm 
Act, and second, and even more powerful, a deep 
sense of patriotic responsibility on the part of the 
Press. It must not, however, be assumed that 
because some authority has been allowed to work its 
sweet will without serious protest, the pubhc or the 
Press is unaware of its grave blunders, of the in- 
justice it has perpetrated, or of the damage it 
has done to all sorts of innocent interests. All this 
is recognised as the price of war, but nothing of 
the kind will be tolerated for five minutes for any 
other reason. 

The Prussian is the slave of the State, but the State 
is the servant of the Briton. This fundamental 
distinction must never be forgotten. In the midst 
of war we are told that Germany has adopted 
National Service, and we accept that argument as 
a good reason why we should submit to that stupid 
scheme for " deyitahsing and misdirecting the 
energies of the nation." But in peace time such an 
argument would have an exactly opposite applica- 

There is another point which Reconstructors 
should be prepared to meet. The vested interests 
in some temporary war department may be relied 
upon to play the financial card very skilfully. We 
shall be told that we have spent many millions in 
estabhshing a department, providing it with build- 
ings, plant, equipment, and what not, and that surely 
this money must not be thrown away. That is 



a false argument. In making war we have de- 
liberately thrown away thousands of millions, and 
whether it has gone in bricks and mortar in West- 
minster, machinery in Coventry, or powder in 
Flanders, it is all waste, and the only people who 
are entitled to annuities out of the process are those 
who have suffered on the actual battle-field. 

We must avoid buying a lot of silly schemes on 
the principles which guide the woman at the draper's 
sale. The aim of Reconstructors should be to blot 
out the effects of the war as speedily and as effec- 
tually as possible, and not to perpetuate one of its 
most glaring abuses. 

Reconstructors must also be very careful to see 
that their suggestions are financially sound. It is 
not uncommon to hear it argued that because we 
can raise a thousand millions for war, therefore 
we ought to be able to raise a like sum for a better 
purpose. But we have not raised any such sum in 
reality. All we have done is to raise threepence 
and send a bill for ninepence to posterity. I am 
reminded of an old merchant I used to know who 
carried on his business by means of bills. He became 
so accustomed to this system and so blind to its 
meaning that he developed the habit of saying 
whenever he signed a six months' acceptance : 
"Well, thank God, that's paid." That man's 
successors had no such reason for thankfulness, as 
they found upon his demise that instead of a large 
estate, which they hoped to enjoy, there was a 
considerable deficiency. 




One of the worst — because the least apparent— 
of the evils which war has brought upon us is a 
false prosperity, which is chiefly due to excessive 
inflation of the currency and the lavish creation of 

It becomes, therefore, very necessary to insist 
that there is no vested interest in war profits, 
whether they take the form of extravagant wages, 
inflated dividends, high prices, or soft jobs. 

A splendid example of the mixture of candour and 
folly in this matter was provided by Mr. Neville 
Chamberlain in an interview with an American 
journalist reported in the Observer on April 29th, 
1917. " Another great service which the war has 
done to Britain has been to teach us all to view with 
real complacency the expenditure of Government 
money upon pubHc works." This sentence robbed 
of its context is not quite fair to Mr. Chamberlain, 
but it serves our purpose because it reflects the mind 
of many of those who have been called to rule over 
us in these latter troublous days. When the war 
is over we shall have to learn to view with real 
alarm and not complacency the expenditure of any 
public money without good cause shown. If the 
British Empire is to be worthy of its name it must 
be financially sound, and the devil's dance in finance 
set going to the order of the Kaiser must be stopped 
at the first possible moment. This is not to say that 
we cannot raise unlimited sums for necessary and 
essential purposes, but to enable us to do so the 
present unthinkable waste in all departments must 


be absolutely stopped and there must be no " com- 

Reconstructors should also consider another 
series of important points, when they touch upon 
trading matters. We must avoid in every case 
great building schemes which begin at the top. 
The most general criticism which can be justly 
levelled against our war methods is that we have 
acted irrationally, always trying to build from the 
top, by means of huge central departments with 
swarms of officials. The rational thing is to begin 
building from the bottom. Whatever the problem, 
first find the unit and work from that. 

When deaUng with industry this is a vital point. 
Trade must be studied and arranged trade by trade, 
one trade at a time, and the unit must be a single 

The Reconstructor would also do well to get a 
clear idea of the proper functions of an official and 
the proper place for a business man. They are 
different types, with different spheres of usefulness, 
and the mixing up of the two is fatal. The official 
has always been known to be a failure in commercial 
and industrial matters, and since 1914 it has become 
apparent that the business man is not to be trusted 
in an official capacity. 

Lastly, the Reconstructor should work in the 
daylight. Every theory, every idea, every draft 
should be available to all parties likely to be inter- 
ested. When war is over we must give up the habit 
of setting a scheme in motion first, and discussing 
it afterwards. 



/ By far the most difficult task which confronts the 
^ industrial reformer is to define exactly the functions 
I and duties of the Government. The developments 
of the last three years have not made this easier. 
We have on the one hand the extreme individualism 
of the past and on the other the alarming socialism 
of the present ; for the wildest dreams of the wildest 
socialist have materiaHsed into amazing fact, and 
we are living to-day under a system of State control 
of production and State interference in trade that 
would have been inconceivable in 1914. 

The battle of the immediate future will be between 
those who think that the State should continue in 
the trading career which it has recently adopted, 
and those who believe that we should revert to 
unadulterated private enterprise. In the end 
neither party will win : because both systems are 
thoroughly bad and foredoomed to failure. Unre- 
stricted individualism is admitted on all hands to 
be incapable of meeting the world crisis with which 
we are faced. State trading, on the other hand, 



is also an impossible proposition. Those who have 
experience of it will agree that it lacks certain vital 
elements which are inseparable from success in the 
realm of commerce and industry. 

The endeavour of the writer is to find a scheme 
which will unite the best features of the two systems. 
The State must help in industry ; it must assume^ 
a measure of control : but without individual initi- 
ative and individual interest, industry can not and I 
will not thrive, nor will the world secure the benefits \ 
which it is entitled to demand from it. *""^-v^ 

The war has given the Socialist a chance to show 
what the State can do in trade and industry and 
has convinced most right-thinking people of what 
they already suspected. It has shown that the 
more the State has to do with the actual work of 
production the more the waste and extravagance 

There is here no intention to complain of what has 
been done since August, 1914. We were admittedly 
unprepared for military war, and we had to face 
a situation which was unparalleled in history. 
Miracles were necessary, and, needless to say, 
miracles were not performed. But we got as near 
to miracles as we could, and we have achieved the 
impossible as far as that could be done. Under 
these circumstances it would be ungracious to cavil 
at the innumerable blunders of the past few years. 
The subjection of Germany would never have been 
accomplished if the" State had not taken the task in 
hand — without regard to anybody's interests, 


without regard to the future, or to anything but the 
immediate prosecution of the war. The fact that 
the most violent interference with everything and 
everybody has been necessary, the fact that destruc- 
tion and waste, apart altogether from the battle- 
field, have been carried on at a rate that is appalling, 
must therefore simply be credited or debited to 
" a state of war." But it cannot be too emphatic- 
ally stated that this sort of thing has been tolerated 
for the sole purpose of defeating Germany, and 
when that purpose is achieved all these abuses 
must be brought to an end with the least possible 

This point cannot be made too frequently or 
pressed home with too great force, because there 
are to-day numerous groups of persons with ready- 
made plans for continuing many of the abuses 
which we have had to suffer since 1914. 

Mr. Neville Chamberlain, whose candid indiscre- 
tion we have already acknowledged, voiced the 
views of numbers of our war-time governors, in the 
interview which he gave to Mr. Edward Marshall, 
an American newspaper correspondent. "Many 
things," he said, "which before the war were 
regarded as the fads of enthusiasts will be regarded 
as wise programmes after the war ends." In 
my view Mr. Chamberlain was unduly optimistic. 
He allowed the splendour of the St. Ermin's Hotel 
and the glorious temporary power of the Director- 
ship of National Service to carry him away. If he 
had only been able to divest himself of his official 



surroundings and peep into the thoughts of some of 
the best British brains, he would have discovered 
that there was the deepest resentment at the way 
in which the Defence of the Realm Act has been 
used to foist upon the community all sorts of stupid 
" fads of enthusiasts " ; that the force of patriotism 
was sufficient to keep this resentment from finding 
expression in the middle of the war, but that when 
the day of peace comes these enthusiasts, including 
Mr. Neville Chamberlain himself, robbed of the 
advantages of military necessity, will have to 
justify all the silly schemes and programmes upon 
which they have squandered the public money. 

The war has done many remarkable things, but 
nothing has been more astounding than the complete 
abandonment of all the principles of Liberalism, 
an abandonment the strength of which has been in 
direct ratio to the pre-war strength of the Liberalism 
of our Dictators. Abraham Lincoln, echoed since 
by many great English Liberals, defined Liberalism 
as " Government of the people, by the people, for 
the people." Mr. Lloyd George has created a 
system of Government in which the very last folk 
to be consulted, or to be considered, or to have 
any voice in the matter are the people who are 

But in abandoning Liberalism we have not 
adopted the old-time alternative of Conservatism. 
In the fight for liberty we have not only robbed the 
people of their liberty but of their property. We 
have invented a most remarkable mixture of the 



principles of the Kaiser and of Mr. H. G. Wells, 
which will provide the historians and economists 
of the future with ample material for debate. 

To return to trading matters, it would seem to be 
wise to re-study the problems of Government or 
State trading from the beginning, and it must cer- 
tainly be understood that war-time experiences do 
not apply to peace-time conditions. In time of 
war it is necessary to allow the Government official 
to dabble in trade. Nobody but a Government 
official can order supplies for the forces. But that 
does not mean that the Government official buys 
these goods to the best advantage, arranges for their 
manufacture to the best advantage, or produces them 
in the most economical way. 

In the ordinary course the Government official 
is the very last person who should be entrusted with 
the direction of the practical side of industry. He 
is constitutionally unfitted for the job, and the 
terms on which he holds his appointment render him 
further disqualified as a buyer or seller or producer. 
There is in his case an absolute absence of respon- 
sibility, and no commercial transaction can be car- 
ried through satisfactorily in these circumstances. 
In Government enterprises nobody pays, nobody 
suffers, nobody runs any risk. The position of the 
Director of a Government establishment is entirely 
different from the position of the Director of a 
properly constituted industrial concern. The latter 
nms the risk of failure and takes his chance of 
success, and he and all those dependent upon him 



rise or fall by the skill which he displays in the con- 
duct of affairs. But with the Government official, 
the position is entirely different. He has only two 
prospects before him : a peerage if he succeeds, a 
pension if he fails. " Success " is hardly the word 
to use in connection with a Government Depart- 
ment which manages to perform its functions in 
accordance with its terms of reference, because it 
starts out with advantages arising from the authority 
which it enjoys, advantages which are denied to 
any ordinary commercial enterprise. 

But the objections to Government trading can 
be put upon a broader basis if it is admitted that 
the need of the nation is to secure the absolute 
maximum in output of aU descriptions. To 
secure that maximimi it is necessary that every 
individual member of the nation should be continually 
employed to the best advantage. If it were possible 
for the Government to arrange to take into its 
employ every inhabitant of these islands and organise 
them thoroughly, to equip itself with the best 
type of machines for every purpose, and to put 
everybody to the job for which he is most fitted, 
and if that process would not tend to decrease individual 
effort, then something might be said for Government 
trading. But if the Government confines itself, 
as of course it must, to undertaking a part only of 
the productive work of the country, and thus puts 
itself into competition with the rest of the nation, 
it will be found that such action simply discourages 
those who are not in Government employ, if indeed 




it does not make it impossible for them to carry 
on business at all. 

To secure maximum output, therefore, it is neces- 
sary for the Government to refrain from any form 
of competition with any of its subjects, and to devote 
itself to helping and encouraging and fostering the 
activities of all of them for the benefit of all. 

If any reader should desire to be strengthened in 
his views as to the blunders of State, Municipal, and 
other forms of public trading enterprise, he could 
not do better than study the writings of the advo- 
cates of these schemes. There are, of course, very 
strong reasons why pubUc authorities should take 
in hand several well-defined forms of public service. 
Wherever there is anything in the nature of what are 
known as public utility services, the case for public 
ownership is exceptionally strong, but when State 
trading goes beyond its province in the way that it 
has been obliged to do during the war, abuses of 
a very serious character invariably arise. 

In May, 1915, the New Statesman published a 
Special Supplement on " State and Municipal 
Enterprise," and gave an exhaustive review of the 
present position. The writers are frankly in favour 
of a very wide extension of this form of public 
activity, and hail with delight the great steps for- 
ward that have been made since 1914. 

It is especially interesting, therefore, to notice the 
examples of State trading which they single out for 
special praise and as models of the sort of thing 
which should be extended in all directions. 


" We need only mention, to begin with, the 
colossal Government factories constantly at work 
in many different countries in the various State 
monopolies, making tobacco, cigars, matches, 
gunpowder, alcoholic drinks, salt, potash, mineral 
waters, carpets, porcelain, the finest engravings, 
and what not, simply for sale." 

To the doctrinaire this sort of example may inspire 
confidence and enthusiasm, but to any who have the 
most elementary knowledge of trading conditions 
and requirements, there is not a single case 
covered by the above paragraph which would 
warrant any support to the idea of further 
development on the part of public bodies in these 

Many of these illustrations are examples of the 
grossest and worst forms of monopoly which it is 
possible to imagine. Monopoly in private hands is 
bad enough, but when the State makes use of its 
powers to foist upon its subjects tobacco, cigars, and 
matches such as the poor Frenchman is doomed to 
use, reasonable people sigh for liberty. 

If the New Statesman is to be taken seriously, 
it should be informed that a revolution will take 
place in these islands before the average Briton will 
tolerate the sort of thing that the continental 
nations have to put up with in this way. 

It is even more surprising to find the New States- 
man holding up salt as an example of benevolent 
and wise Government action. Further inquiry would 
surely show that the tax on salt which is the result 



of such action constitutes one of the gravest dangers 
to the health and welfare of the States who are so 
misguided as to adopt it. 

The carpets and porcelain referred to are the 
" Gobelins," " Sevres," and " Dresden " factories, 
but these are not examples of commercial enter- 
prises. They are really part of the system of 
national education, and I should be very glad indeed 
to see the educational authorities in this country 
spending more of their energies in connection with 
the production of works of art. 

The same publication gives another excellent 
quotation, which instead of strengthening the case 
for State trading is the most emphatic condemnation 
of it that could be imagined. The New States- 
man quotes with pride, as showing the benevolent 
change that has come about within a single genera- 
tion, Mr. Lewis Harcourt, then Secretary of State 
for the Colonies. Mr. (now Viscount) Harcourt 
is reported to have said : — 

" In these days the Colonial Office has more the 
attributes of an immense trading and administrative 
concern than those of earlier days, when it was a 
mere machine of Government. My days and nights 
are spent in the study of medicine, in the details of 
railway construction, with a desire that the smallest 
sum of money may lay the largest number of miles 
of track in the fewest possible days. I am a coal 
and tin miner in Nigeria, a gold miner in Guiana. 
I seek timber in one colony, oil and nuts in another, 
cocoa in a third — copra and copal, seisal and hemp. 


cotton, coffee, tobacco are common objects of my 
daily care." 

This is surely a most remarkable case of the misuse 
of an illustration. It may serve the purpose of the 
Fabian nursery and strengthen the student's attach- 
ment to the principles he holds dear, but to anyone 
with commercial experience it has the exactly oppo- 
site application. 

The whole tendency of business for a hundred 
years past has been specialisation. The only 
successful industrial developments have been along 
the lines of specialisation. The difficulties of 
succeeding in any department of manufacture or 
production are now so great that it is essential that 
every business man should confine his studies and 
effort within a Hmited compass. And, yet, if you 
please, we are asked to believe that Mr.' Lewis 
Harcourt, cultured and charming as he is, but whose 
apprenticeship to trade is not upon the records, can 
be a successful coal miner, tin miner, gold miner, 
lumber man, oil and nut merchant, cocoa importer,' 
and half a dozen other things every day of his life! 
The answer to Mr. Harcourt is perfectly simple 
and obvious. It is that the office over which he 
presides is under no obligation to make a profit 
has no account to render to proprietors or share- 
holders, is not dependent for its existence upon the 
revenues which it can earn, but has at the back of 
It the inexhaustible funds of the poor British tax- 
payer, and in consequence can afford to allow a most 
estimable aristocrat to trifle with all these important 




matters, to the sorrow, indeed chagrin, of the people 
who know. 

It has for long been recognised that the orthodox 
official mind is not the type that is required for 
success in business. After our painful war experi- 
ences it will equally come to be recognised that the 
successful business mind is the very last that one 
expects to succeed in any official capacity. Having 
arrived in this way at both sides of the question, it 
will be seen that there is a very definite dividing line 
between the functions of the official and the func- 
tions of the business man, and that beyond that 
line neither can travel with success. 

It wbuld not be fair to base arguments upon the 
experiences of 1914-1917, if it were admitted that 
the numerous developments of those days were 
merely war- time makeshifts. But in view of the 
attempt to bolster up and fortify these houses 
built uf)on the sand, we are entitled to protest. 



A SURVEY of most of the attempts of Government 
Departments to handle business propositions creates 
in the mind of the business man a feehng of pity. 
All these things seem so simple on the face of them, 
and the learned Government officials, with their 
carefully prepared theoretical minutes, are generally 
able to make out a good case for any action which 
they propose to take. But commerce is a compli- 
cated thing, and those who have experience of it 
have reason to know that simple theories do not 
always work out in practice. 

The official mind is not a business mind. It 
delights in points which for commercial purposes 
do not exist and which merely bore the business 
man. The impossibility of mixing these two types 
has been illustrated a thousand times since it became 
the fashion for business men to give their services 
to Government Departments. 

The business man cannot accustom himself to 
official etiquette. He cannot see the necessity for 
the innumerable references to other departments 
and the consequent intolerable delays. 




It may not be generally known that if a post card 
is sent to a Secretary of State to call his attention 
to some trivial point, that post card is threaded with 
an official tape, attached to a Minute Sheet, and the 
whole bound up in a manilla jacket. On the front 
of the jacket will be written a whole mass of numbers 
and references, inserted there by a registry which 
no doubt understands them. Below this informa- 
tion are three or four columns in which are entered 
the date the document is received, the name of the 
person to whom it is referred, and the date upon 
which he passes it on. There is accommodation on 
the front of this jacket for eighty or ninety such 
entries. The ambition of the official mind is only 
achieved when the whole of the front of the jacket 
is completely occupied with the names of the officials 
to whom the matter has been referred. 

This post card will wander about Whitehall for 
months and be sent to everybody who is anybody, 
" for observations." No well-constituted Govern- 
ment official takes action until this process of con- 
sultation has been made as complete as possible. 
The really expert official is the one who can think of 
the largest number of other officials who ought to 
be consulted about every point. The super-official 
is the one with a mind so highly trained that it 
can discover some good reason why every matter 
submitted to it is not really a matter for it to 
decide at all, but for the consideration of some other 

This is the way in which the British tax-payer is 


doomed to do his business. The joke of the whole 
thing is that these numerous references from great 
minds which have secured official distinction on the 
strength of their classical education, produce in 
the end nothing but error. These are the methods 
which fix the price of the potato at £S a ton and 
forget to mention whether that is a minimum or 
a maximum figure. They evolve an Order that 
gooseberries shall be ;f20 a ton when the market 
only asks £14. They load a ship, unload it, and 
load it again with the same cargo before it is 
allowed to sail. 

There is another way in which the official fre- 
quently goes wrong when he enters the trading 
field. He has been educated in the theory of 
Government and taught to believe that the under- 
lying principles of every department are the same. 
That is why when he gets a problem to solve he 
passes it round from department to department. 
In exactly the same way he makes his career and 
gets his promotion by being passed on from one 
department to another. This sort of thing will not 
do in business. Experience in the Post Office may 
qualify a man for a high position in the Inland 
Revenue Department, or success in the India Office 
may be the road to a better salary at the Treasury. 
But when we come to trade, experience gained in 
one trade is very seldom of any use in another. 
Each trade has its peculiarities ; each trade has its 
habits and its methods of doing business : and ex- 
perience gained in the manufacture of gas will be 



of no use and may even be a disadvantage in deal- 
ing with the problems of the timber trade. 

The endeavour of the writer is to show that a very 
careful distinction should be made between the func- 
tions which are proper to the Government and those 
which should be left to the individual • and it 
becomes obvious that in trading matters, or any- 
thing nearly appertaining to trade, the Government 
and its officials are out of place. The old Board 
of Trade furnishes an excellent example of the proper 
functions of the Government. So long as it confined 
Its attention to the regulation of such matters as 
bankruptcy, harbours, railways, load lines, life- 
saving appliances, factory inspection, weights and 
measures, company registration, and other similar 
devices for carrying on work which may be described 
as the " policing " of trade, it was within its proper 
limits. But its later developments into Commercial 
--Intelligence Branches and Labour Exchange Depart- 
ments, have gone over the line which should define 
the activities of the official. 

The Commercial Intelligence Branch of the Board 
of Trade may be examined in this connection. Here 
is another case where theory does not work out in 
practice. It would seem to be a very proper proceed- 
ing for the Government to endeavour to collect 
commercial intelligence for the benefit of traders. 
But the fact that notwithstanding the most strenuous 
efforts the work of this department has never grown 
to the size of a respectable merchant's office, shows 
that there is something wrong. As is pointed out 


elsewhere, the mistake in this matter was the 
endeavour to comprise within a single department 
the interests of all the trade of the country. As a 
matter of fact, every industry requires its own 
commercial intelligence branch, and each industry 
could justify an office of its own of far larger 
dimensions and greater activities than the whole 
of the existing Commercial Intelligence Department. 
We must recognise that the official is no business 
man and the business man is no official. The busi- 
ness man's life is made up of successes and failures. 
He runs, as everybody knows, what is called a 
profit and loss account. Every business has its 
losses as well as its profits, and the successful busi- 
ness is that which has more profits than losses and 
thus finishes with a balance on the right side. The 
business man is free to make mistakes and always 
does make them, but so long as he is right rather 
more often than he is wrong, he justifies his existence. 
These are the basic principles of trading. But 
they cannot apply to Government activities. The 
Government in theory cannot make mistakes. It 
must always be right. Hence the need for the 
classical scholar with his minutes and his jackets 
and his innumerable references, things which ought 
to be unknown in business. The very essence of a 
business contract is time. Every trading transac- 
tion must have a time limit if it is to be successful. 
The most profitable piece of work can be turned into 
a loss if only sufficient time is occupied in the doing 
of it. The principles which underlie Government 


transactions cannot admit this time factor. The 
Government cannot hurry, and this fact alone 
ought to be sufficient to keep the Government out 
of any trading transactions. 

But this chapter wants a postscript, or it might 
give an entirely wrong impression. It is intended 
to show the danger of trespass by the official beyond 
his proper sphere, but it is not intended to imply that 
the official is unnecessary or incompetent in connec- 
tion with those functions for which he properlv 
exists. ^ r J 

When trading questions are delegated, as they 
wiU have to be delegated, to expert Trade Councils 
the official will then come into his own. The pro- 
cedure of those Councils will require regularising 
and co-ordinating, their powers will want definition 
their actions wiU be improved by criticism their 
accounts will need certifying, their differences will 
call for arbitration, their confficting interests will 
have to be reconciled : and in these and many other 
ways the Government officials will be busily occu- 
pied with matters which they understand fully and 
with which they are pre-eminently fitted to deal. 



In a reply to a deputation of the Labour Party, 
Mr. Lloyd George said : — 

*' Audacity is the thing for you. Think out new 
ways. Think out new methods. IJiink out even 
new ways of dealing with old problems. Don't 
always be thinking of getting back to where you 
were before the war. Get a really new world." . . . 
" The readier we are to cut away from the past the 
better are we likely to succeed." . . . " I believe the 
settlement after the war will succeed in proportion 
to its audacity." 

A mandate from the Prime Minister is thus the 
excuse for a few audacious speculations as to the 
possibilities of trade. There is a " new world " 
to be got in trade, if only we go the right way to 
find it. 

In the year 1900 the United Kingdom exports 
amounted to £354,373,754, or £7 is. 6d. per head of 
the population. In 1913 these figures had risen 
to £634,820,326, or £13 15s. lod. per head. Thus in 
thirteen years, during which time we had developed 







the practice of restricting output to a fine art, we 
succeeded in very nearly doubling our rate of expor- 
tation. Further, this was achieved before we had 
tackled the problems of production in the serious 
way that has been necessary since war began, before 
we had added to the ranks of industry the million 
or so of additional workers who have since been 
discovered, and before we had acquired anything 
like an adequate equipment of automatic machinery. 

In response to the Prime Minister's request for 
audacity it is interesting to figure what would happen 
if exports were increased to £ioo per head of the 
population. This may seem to be aiming too high, 
but it is not an altogether impossible suggestion, 
as many practical readers, readers who have 
acquaintance with the httle that is done to develop 
export trade in most directions, will agree. 

If exports were increased to £ioo per head of the 
population the total would then be £4,616,875,098 
per annum. Now let it be imagined for a moment 
that the war could be paid for entirely by exports, 
an assumption that is not absolutely true but quite 
true enough for our present purpose. In that case, 
with exports at £100 per head, we could pay our 
war costs twice as rapidly as we had incurred them. 
We should soon get " a really new world " that way. 
But " audacity " leads us on ! 

Why should it not be possible to make production 
the fashion ? Since 1914 we have adopted all sorts 
of fashions that we never dreamed of before. It is 
not only unpatriotic but bad form to dress well, 

and in this and many other ways we have entirely 
reversed our views. Is it then unreasonable to 
suggest that when the war is over we should reverse 
our views on trade ? Is it unreasonable to ask that 
the gentlemen of the future should be those who are 
actually engaged in production ? Is it impossible 
that we should reverse the social status of the pro- 
ducer and the man of leisure ? The moral force of 
such an alteration would give us all the desired 
results. The readiness with which we have adopted 
new views on most matters, in obedience to the 
dictates of war, should enable us to take up 
new ideas in considering the vital interests of 

There was a time, indeed there is a time, when the 
schoolmistress, anxious for the social reputation of 
her seminary, made careful inquiries as to whether 
a parent was in trade before accepting the child. 
Why should the rule not be reversed ? If the 
Archbishop of Canterbury, and one or two such 
leaders, would invite the schoolmistress in the future 
to refuse the children of any parents who were not 
connected with some form of production, we should 
add a very large slice to the £100 per head of exports 
that we have set as our ambition. 

As things were constituted in 1914, no trader ever 
secured admission to a first-class club, as a trader. 
He had to squeeze in as a director of companies, 
and he was the more welcome the nearer his direc- 
torship approximated to the guinea-pig order. Is 
it too mudh of a revolutionary suggestion that in 


view of the nation's crying need for production, 
admission to clubs in the future should be on the 
distinct understanding that the candidate is engaged 
in some useful branch of industrial activity ? 

The Vice-chancellor of the University of Sheffield, 
Professor Ripper, has expressed this point in an 
ideal way. " Trade and industry," he says, " must 
be recognised as the natural, healthful, and normal 
means whereby the nation is able to express itself 
in useful service. To accomplish this result will 
require from each of us, from the highest to the 
lowest, our best efforts, and our most devoted 

The work of repairing the wastage of war will 
require, in addition to a great deal of automatic 
machinery, a very much greater deal of alteration 
in the fashion with regard to trading matters. 

But we have not exhausted the possibilities when 
we have induced every fit hand and brain to take a 
part in the building up of the nation's industry. 
The next step would be an Efficiency Campaign. 
Imagine the possibilities of such an agitation if 
conducted with half the vigour of the Derby scheme. 
Think of Mr. Lloyd George with aU his eloquence 
leading a campaign for "Empire Efficiency." 
*' There has never yet in this country," says Mr. 
Charles Lancaster, " been any public agitation for 
greater national efficiency. Men who have been 
called captains of industry have now and then 
appeared, and will appear again, but no great man 
can by his personal management compete in results 




with a number of ordinary men who have been 
properly organised so as efficiently to co-operate." 
The same writer makes the interesting suggestion 
that trade associations should be called efficiency 
societies. There is already the Bradford Business 
Science Club, st capital little body of keen men who 
meet weekly to discuss questions of efficiency. I 
need not elaborate this point. 

We are getting on with our ;f loo per head of the 
population. Increased machinery, the abolition of 
limitation, production as a fashion, coupled with an 
Efficiency Campaign, all help us to see that the 
figures we were bold enough to suggest are not so 
impossible after all. But there are other things 
that yet remain to be done. The elimination of 
waste is a subject all to itself, full of really gigantic 
possibilities. The authors of " Eclipse and 
Empire " state it as their opinion that by means of 
the saving of waste and the invention of new methods 
and materials, the whole of the expenses of this 
great war could be defrayed in one generation. 

So far we have proceeded to build up the industrial 
revival that is required from outside, by creating a 
different atmosphere, a different standard of opinion, 
on the subject of trade and industry. But there is 
other work to do before we shall reach our ambition 
of paying for the war in a couple of years. 

Such business brains as we possess are to-day 
chiefly devoted to the welfare of individual firms 
or companies. The managers of a shipbuilding 
company, or a chemical concern, or an agricultural 




implement house, are engaged primarily on the well- 
being of that house. A very large proportion of 
their energies is devoted to competition with other 
houses, and as a result there is overlapping and can- 
cellation of effort to an alarming extent. 

A very great step forward towards our £100 per 
head and our " new world " would be made on the 
day when we agreed to take our trades one at a 
time, trade by trade, and study them as whole 
trades. There are very few of our minor industries 
whose output could not be doubled if the^men 
engaged in them were to work together instead of 
against one another. Production of large varieties 
of small quantities such as is the rule in England 
to-day, would give way to production of limited 
varieties in big quantities. This side of the subject 
is dealt with more fully elsewhere and need, therefore, 
only be mentioned here. It is, however, beyond 
dispute that there is room for immense expansion 
in the output of each of our industries if it were 
possible to treat each of them as one single unit 
and organise it properly. 

This brings us to the difficult problem of the 
Nation's interest in trade. In order to pay for the 
war in the Hmited time that Mr. Lloyd George's 
" audacity " has tempted us to suggest, it will be 
necessary for the Government to take a very 
different view of its responsibilities to industry. 
Hitherto the theory has been that when the Govern- 
ment has issued a few regulations as to guards for 
machinery and fire precautions or set up a wages 




board, its duty to trade is at an end. In future the 
Government will have to take a much fhore active 
interest in the promotion of trade. We cannot again 
allow whole industries to disappear simply be- 
cause capitalists find a more remunerative means of 
employing their money, or workmen go on strike. 
It must be part of the duty of the Government to 
see that each industry which can profitably and 
properly be carried on in these islands is established 
on a firm and lasting basis and exploited to its fullest 

This question of the relations between the Govern- 
ment and trade is the matter with which this book 
is chiefly concerned, and is the most difficult of all 
the problems connected with Reconstruction. If 
the possibilities of trade are to be realised to their 
fullest extent it is obvious that Government help 
and encouragement must be forthcoming. Govern- 
ment Departments must realise that to set up in 
competition with an estabhshed industry is not the 
best way to encourage that industry to develop 

Mr. Ritchie's Local Government Act of 1889 gave 
new fife to our Counties, Towns, and Cities. It is 
not too much to say that it was the basis upon which 
the London, the Birmingham, and the Glasgow of 
to-day have been built. Modern systems of sani- 
tation, locomotion, town planning, and education, 
have not been brought to their present state of 
efficiency by the activities of officials in Whitehall. 
The tremendous strides that have been made in 




these matters within the last five and twenty years 
have beenfTntirely due to a poUcy of devolution and 
the conferring of adequate powers upon local 
authorities, with the result that a live civic spirit 
has been cultivated. 

In exactly the same way the full development of 
industry will never be attained by the dabbling of 
doctrinaires in Westminster in all sorts of doubtful 
trading speculations. But if the Government will 
create for each industry an authority elected upon 
a proper basis and modelled upon our excellent local 
authorHks, then the life and well-being, prosperity, 
and expansion of each industry are assured. 

To carry out this suggestion would amount to 
the endowment of Trade Councils with statutory 
powders, and the placing upon these Councils the 
responsibility for the welfare of the industries which 
they represent. A useful thought in this connection 
is furnished by the New Statesman Supplement on 
Professional Associations. " It should, we think, 
be a matter of professional honour for the collective 
organisation of each profession to see to it, not 
merely that its members are well qualified and 
properly remunerated, but also that the service of 
the profession is supplied in adequate quantity for 
the needs of the community, not only the rich but 
also the poor." The New Statesman is dealing 
with professional associations : the argument applies 
with equal force to trade associations. 

If, therefore, we could add to the other minor 
revolutions that we have suggested, the setting up 




of a statutory authority in every industry to 
encourage and organise the efforts of those engaged 
in that industry, another great advance towards the 
£ioo pec head would have been made. " We 
want to think in larger multiples," says Mr. Fisher, 
Minister of Education. " Our business ought to be 
organised on a larger scale and with more science. 
Until we get into the habit of thinking on a larger 
scale, both with regard to the organisation of busi- 
ness and the scientific equipment which should 
serve those businesses, we are not in a fair way to 
achieve any very great results in applied science." 

Last, and by no means least, we must get rid of 
the small mind, especially the small mind in big 
places. That is one of the greatest dangers which 
confront the nation at the present moment. We 
have too many small-minded faddists in all these 
new Government Departments and Directorates, 
and the fear is that some of these people, having 
secured the ear of those in authority, may induce 
the State to embark upon silly small schemes, 
schemes which are not within the province of the 
State and which cannot be properly understood in 

The small mind is useful enough in its way, but 
it must not be tolerated at the centre of Govern- 
ment. The establishment of a system of devolu- 
tion for industry, the setting up of Trade Councils 
in every industry, the confining of the thought and 
effort of Government to the principles of governing, 
will leave plenty of scope for all these faddists to 



put their schemes before the practical men who will 
be found upon the numerous Trade Councils. 

A new vista will appear when once the principle 
of national interest in trade is admitted, and 
undreamed-of possibiUties will come to light when 
we begin the study of whole trades, one trade at a 

But to come back to Mr. Lloyd George and 
audacity. One is tempted to express all sorts of 
dreams which, although they may be dreams, are not 
so unpractical as they appear. The trade of the future 
is charged with the duty of providing the world 
with the best of everything. There is no end to its 
opportunities and no limit to its possibihties. For 
instance, the work of giving every man, woman, 
and child in these islands the opportunity for a 
warm bath every day, expressed in terms of trade, 
represents an order for about one hundred million 
pounds' worth of goods. If similar advantages could 
be extended to the Western Hemisphere alone, to say 
nothing of the whole globe, it would mean in terms 
of trade unending employment to the masters and 
men engaged in the manufacture of baths and hot- 
water apparatus. But the hot bath is by no means 
the height of ambition as present-day ideas run. 
Everybody wants a more frequent change of linen, 
more furniture, more variety of food, more amuse- 
ments, more recreation, more books, more light 
and heat, more of every imaginable amenity of life. 
And the satisfaction of these needs represents enough 
w^ork to keep us all engaged, with the assistance of 




the best machinery, for generations to come. And 
then, before these requirements are one-tenth filled, 
many new needs will have arisen. In fact, demand 
will always be ahead of supply if only the right 
ideas are kept uppermost in mind. 

In considering the possibilities of trade expansion, 
we have confined our remarks to the paltry ambi- 
tion of £ioo per head in exports, but we hesitated 
at the beginning of these notes for fear of giving 
too great a shock to the reader. We dare now to go 
beyond that aspiration. The £ioo per head is not 
a sufficiently ambitious mark to set before ourselves. 

The last Census of Production proved that the 
net output per workman employed in factories in 
Great Britain amounted to £102. In that simple 
fact one discovers the reason for the limitation that 
has to be placed upon the earnings of the industrial 
classes. For if the workman were to succeed by 
agitation in securing the whole of the £102 which 
he produced, he would not then have reached any- 
where near the point which he had set himself as 
his standard of comfort. 

Let us assume therefore, in the audacious mood 
which we have adopted for the purpose of these 
notes, that, by making production fashionable, you 
have doubled the number of producing hands : 
and then add to these sufficient automatic and 
labour-saving machinery to make the output ^^500 
per worker. If these two assumptions are not 
impossible you would increase our output, our pro- 
duction, our real wealth as a nation, ten times. 



This is undoubtedly overstating the case, but we 
plead Mr. Lloyd George's " audacity." 

It must not, therefore, be assumed that we can 
exhaust the possibilities of trade by means of an 
increase in exports alone. The field for develop- 
ment in home trade, home consumption, and there- 
fore home comfort, is equally inexhaustible. 

The elected Trade Councils would, of course, be 
concerned with quality as well as quantity ; the 
two things must go together. They would give 
full scope for the forces of art and science to make 
themselves felt in our industries. These forces are 
largely ineffective to-day, owing to the absence of 
that collective and co-operative spirit upon which 
they both so largely depend. 




Next to the war, our trade is the question which 
should be uppermost in our minds. The well- 
being of our industries is the foundation upon which 
every other form of national life depends. The 
success of British trade in the past has been one of 
our greatest achievements. We have always led 
the world of commerce, and so far no rivals have 
succeeded in taking that position from us. But 
the war has called a halt, and given us time to review 
our position, and we have now discovered that 
competition is much stronger than we had realised. 
The war has done something else— it has made us 
poorer, it has created a necessity for a great 
increase in our trade, and has brought about a 
situation where new methods, new ideas and 
drastic alterations have become essential. 

In these circumstances it is natural that all sorts 
of plans should be produced and pushed, and from 
out-and-out Utopians downwards schemes are being 
advanced by the dozen. 

Mr. H. G. Wells wants to do away with " the little 



man in the office " ; Sir Leo Chiozza Money wants 

to turn the State into a wholesale grocer- Mr 

Sidney Webb stands for nationalisation;' Mr' 

Lloyd George, armed with Defence of the Realm 

Acts, starts the State upon a career as " the largest 

firm on earth,- running anything from public-houses 

to shipyards ; Mr. Hughes is determined that not 

one tmy rootlet of the upas tree of German trade 

shall remain ; and so on. 

Conferences are held ; Royal Commissions and 
?^r^ Committees spring up like mush- 

rooms ; every few minutes another Chamber of 
Commerce or other self-appointed and unrepresenta- 
tive body comes into being ; Trade Unions pass 
resolutions ; and the ordinary human mind is 
sta^ered with the welter and chaos of it all 

The outstanding problems are as numerous as 
they are varied. The capture of German trade, 
the trebhng of our revenue, the employment of our 
soldiers, the cheapening of production, the increase 
01 output, the development of the resources of the 
limpire, the improvement of the general standard 
of hving, are some of the leading questions. There 
IS m all conscience enough to do, and the question 
wmcii is in the minds of most of the thinkers on 
these matters is, " What part should the State take 
in ail these movements ? " 

William Whiteley, the pioneer of the multiple 
department business in this country, succeeded 
because he decHned to dabble in detail • he dele 
gated responsibiUty, he put experts in every depart- 



ment and left it to them ; he contented himself with 
the work of supervising. The British Empire may 
be likened to a great multiple department concern, 
and the Whiteley principle— the expert and delega- 
tion—is the only basis upon which it can be success- 
fully managed. The one necessity to Whiteley 
was turnover, and the one necessity to the Empire 

is output. 

The position of the State in relation to industry 
may be likened to that of a debenture holder in a 
trade corporation. The debenture holder is in 
fact the supreme authority and exercises a benefi- 
cent influence over the Company's operations : 
and yet, in the ordinary way and so long as things 
go well, he takes no part in the active working of 
the business of the Company. A debenture holder 
in a Limited Company is not even privileged to 
vote at its Annual General Meeting. He is seldom 
represented on the Board. His interests are watched 
over by Trustees, whose duties in the case of a 
successful enterprise are purely nominal. But if 
things go wrong, if there is any fear of dangerous 
competition damaging the Company's security, 
or any reason to suppose that things are not as they 
should be, then the debenture holders appoint a 
Receiver, and the Directors, Managers, Shareholders, 
and others have to bow to his authority. 

There are really three parties interested, deeply 
interested, in the prosperity of each industry: 
(I) The State, (2) Labour, (3) Capital. These three 
parties should be in partnership for the purpose of 



promoting the welfare of each trade. The partner- 
ship might well be compared to the constitution of 
a Limited Company, in which the position of the 
debenture holder was occupied by the State the 
position of the preference shareholder by Labour 
and that of the ordinary shareholder by Capital 

In considering the relations of the Government to 
trade and industry, it may be convenient to inquire 
what It is that the nation wants from trade This 
simple question has in the past been confused with 
side issues which have almost entirely monopolised 
the discussion. We have got into the habit of 
giving the whole of our mind to problems like Free 
Trade and Protection, or Work and Wages, and it 
seems to me that we have now to go back a little and 
consider the primary interests of the nation in 

If we take the Boot Trade as an example, and look 
at It from a national point of view, we find a few 
hundred so-called masters representing a few millions 
of capital at present in control of the trade Next 
there is a much larger body of managers, salesmen 
accountants, travellers, shippers, and wholesale 
and retail shopkeepers. Last and most important, 
there is an army of operatives engaged in the actual 
work of manufacturing boots. 

Looking at the matter from the national point 
of view only, and ignoring for the moment the 
interests of the trade, the best thing that can happen 
IS that the maximum quantity of the best boots 
should be produced, that the proportion of boots 



to population should be high, that the largest 
possible number of pairs of boots should be sent 
abroad. That, it seems to me, is the national point 
of view. 

Next we arrive at a number of secondary considera- 
tions such as foreign competition, involving ques- 
tions like tariffs, and wages, and profits, which are 
domestic questions as between the different persons 
who go to make up the Boot Trade. But the first 
essential is the production of the maximum quantity, 
and adequate arrangements for the disposal of that 
production, a problem which so far as I am aware 
has never attracted the interest of the politician 
or of the Government. 

A further study of the boot industry will show 
that the small body of masters who control the 
capital and are in command of the trade are able 
to stop production altogether if it suits their financial 
interests to do so. On the other hand, the opera- 
tives, well organised in trade unions, possess to-day 
the power to call a strike and inflict harm not only 
upon the Boot Trade but upon the nation. 

Or again, the price of money or the opportunities 
for investment may so alter as to make it w^orth 
the while of the capitalists interested in boots to 
take their capital away, thereby throwing the opera- 
tives out of work, robbing the nation of its boot 
trade, and sending the industry, lock, stock, and 
barrel, to Germany or America. 

This sort of thing has happened many times. 
There is no authority which can watch the national 


interests in these matters. The British Boot Trade 
to-day depends upon the accident that a certain 
number of capitahsts, managers, and workpeople, 
in their own discretion, think it worth their while 
to engage in the manufacture of boots. 

" We all know that no Government before the 
war thought for a moment that the magnitude of 
our iron and steel industry was a subject in which 
the theory of government was concerned, and we 
are paying now for the old neglect." 

" Let us suppose that a well-equipped Ministry 
of Commerce, collecting continuously accurate 
records of progress in every industry, possessed 
the practical means of making prompt and direct 
representations to the members of any trade. Let 
us imagine also that it was found that an important 
trade was becoming stagnant, as our iron industry 
became stagnant before the war. The Ministry of 
Commerce would make it its business to call the 
iron trade association together, and to discuss the 
whole situation with its members. If it failed to 
secure from the trade the assurance of progress, and 
if the national interest demanded a larger output, as 
it most certainly did in the particular case referred to, 
it would become the duty of the Minister of Com- 
merce to devise means to enlarge the production, 
whether by way of stimulating the supply of capital! 
or otherwise."! 

Does it not become evident that the duty of the 

Sir Leo Chiozza Money, Evening News, July 24th, 1916. 



Government, as part of the process of governing, 
is to make such arrangements that this nation shall 
occupy a proper place in every sphere of trade ? 
If the Government were to insist upon some form of 
organisation which would give to every manufacturer 
and every workman the opportunity of being repre- 
sented, it could spend public money in the develop- 
ment of an industry, and that money would be 
spent on interests which are truly national. I sub- 
mit that the maintenance of output in every trade 
is a proper matter for the consideration of the 

The work of the Government in assisting industry 
should take the form of organisation, direction or 
control, rather than of direct Government interven- 
tion in actual trading transactions. The business 
of Imperial Parliament is not to do things, but to 
set up the proper authority in every branch of 
national activity. We must never forget the com- 
plicated nature of trade and industry, the inter- 
dependence of one branch upon another, the necessity 
for all sorts of middlemen, speculators and agents. 
In working this complicated machine every part 
reacts upon the other parts, and when the Govern- 
ment goes out of its way to dabble in trade it always 
finds that it is involved in difficult complications. 
The Government should encourage the activities 
of traders and not attempt to compete with them. 

There is a general outcry at the present moment 
for Government assistance in connection with 
trade. The commonest form that this demand 





takes is a call for a Minister of Commerce. The 
answer of the Government to this outcry is the 
appointment of great numbers of little Committees, 
all lacking in representative character or authority, 
and each attempting to deal with some little detail. 

" We are going about the business of our national 
future like a family which is acquiring an auto- 
mobile, by sending father out to get some sort of 
good engine, it doesn't matter what, mother to 
back her fancy in carburettors, Frankie to get 
acetylene headlights, Bertie to buy wheels, and 
Georgie to buy tyres, regardless of each other 
and the weight and size of the whole, leaving the 
rest of the equipage to happen somehow, while 
sister Beatrice sits at home inquiring into the re- 
spective merits of the petrol and the steam engine, 
and Caroline looks through the accounts to find out 
whether the family can afford to set up a car of 
any sort at all. 

" Economic reconstruction must be a general 
act. It is an idle dream, and all too prevalent 
a dream, to suppose that any great economic 
reorganisation can be brought about by quiet 
meetings of bankers and big business men and 
unobtrusive bargains with Government depart- 

Our trade and commerce is Ihe only part of our 
national life which is not organised upon a represen- 
tative basis. There are vast stores of energy, 
ability, and genius in business, half of which is 

* •' Elements of Reconstruction." 



now wasted owing to lack of cohesion and organisa- 
tion. The Government must deal with trade in a 
^ much bigger way. It must learn to think in hun- 
dreds of milUons and ignore details. It should 
not dabble in trade any more than it dabbles in 
local affairs. Its true function is to set up proper 
authorities in each trade, just as proper authorities 
are set up in each locaHty. In trading matters 
the Government ought to prescribe and not dis- 

A glance at the history of Local Government will 
help the argument. In the eighteenth century, 
when the inhabitants of any district wanted to 
pave the streets or to make any local improve- 
ment, they formed a society and shared the cost 
voluntarily among the members. These voluntary 
societies gradually transformed themselves, generally 
by special Acts of Parliament, into various bodies 
of Road or Harbour or Street or Lighting Com- 
missioners, which levied compulsory rates, and 
acted in the name, not of this or that exclusive 
group, but of all the local residents. 

It will thus be seen that in trading matters 
we are in the same position as we were in the 
eighteenth century in matters of local government. 
We have our voluntary associations struggling 
with the impossible task of organising our trades : 
impossible, because these organisations have no 
authority, are not representative, in fact, in most 
cases have no legal status. They do the best 
they can in the same way that the voluntary 






i ( 

ii i 

bodies attempted to tackle the problems of local 
sanitation. The possibilities for improvement in 
our trading position by the proper appUcation of 
Government help, are as great to-day as they were 
two centuries ago in improving our local adminis- 

If the Government would give up all the many 
ways in which it is playing at trade, and give 
the advantage of its recognition to properly con- 
stituted councils of industry, our position would 
be immeasurably strengthened. 

I have already dipped into the fund of suggestions 
contained in the letters to The Times, on the 
" Elements of Reconstruction," but the ideas of 
these authors are so pertinent to our subject that 
they must be mentioned. They go a good deal 
farther than I am prepared to go, and challenge 
the constitution of Imperial Pariiament itself. 
They call attention to the fact that we have on 
the one hand representatives of such places as 
Croydon or Hampstead or Battersea, whose in- 
habitants have scarcely anything in common 
except a postal address, and that, on the other 
hand, if we want to deal in any satisfactory way 
with the transport workers or railway servants 
or medical men or electrical engineers, we have 
to go outside the formal constitution altogether 
and discuss matters with trade and professional 
organisations that have neither legislative nor 
administrative power, that may not represent the 
entire profession or industry concerned, and that 

are often mere organisations for restricting work 
and raising wages, without any tradition or sense 
of public function. 

They suggest that the shortest way to economic 
reorganisation may lie in lifting most of the tasks 
out of the scope of the Legislature altogether, in 
largely increasing the powers and scope and respon- 
sibilities of the great labour organisations, in bring- 
ing both them and the national councils of the 
employers and proprietors of the great industries 
into the structure of the Constitution, in insisting 
upon joint conferences and joint action, and in 
leaving Pariiament Httle more than the power to 
endorse or veto the outcome of these joint dehbera- 

I am not prepared to follow these writers in 
their larger criticism of Imperial Parliament. It 
is very necessary, in my judgment, that Members 
of Pariiament should be as free as possible from 
direct connection with any interests, and if the 
principle of representation of districts has lost 
its original meaning, I should rejoice to think that 
our legislators were to that extent more free from 
local or particular prejudice. Pariiament has a 
great deal to do apart altogether from trade and 
commerce, and, for my part, I should be quite pre- 
^ pared to leave it alone if only it would consent to 
leave trade details alone, and to delegate its powers 
in these matters to properiy constituted authorities. 
Such help as the Government now gives to trade 
is open to the objection that it involves the spending 





1 1 

of public money for the furtherance of private 
interests. If those private interests were merged 
into national interests, pubHc money could be 
freely spent, and certainly it will have to be spent 
in very large amounts, on the promotion and main- 
tenance of our trade and commerce. 

Government help in trading matters, as at present 
given, is open to the further objection that it is 
generally the result of personal influence. If the 
Government think it wise to spend money upon 
education or research or anything else, in connection 
with boots or leather, that money ought to be 
spent upon the advice and with the assistance of 
the properiy elected representatives of the boot 
industry, and not at the request of some Member 
of Pariiament who happens to be interested and 
to have the ear of one of the Government 

There is the further objection about the present 
haphazard method, that when the Government 
comes to the aid of a small body of traders, there 
is generally another body of similar traders who 
feel aggrieved that they have not shared in the 
benefits secured. 

The setting up of properiy constituted public 
authorities in each industry would greatly facili- 
tate the work of the Government in promoting 
our trade. There would be an end of all the hole- 
and-corner private arrangements which are the 
cause of so much trouble and discussion 

Whatever reorganisation is attempted ought 


to be done in the dayhght. It ought to be done in 
such a way as to inspire confidence. It ought to 
be free from any of the abuses of nomination or 
influence. I have the greatest respect for a Mem- 
ber of Parliament, but a Member of Parliament 
is very seldom a representative trader. He is 
not as a rule identified with the interests of any 
particular trade ; if he is he ought not to be. His 
duty is to watch the interests of all trades and of 
the nation as a whole. What does the honourable 
member for, say, the Whitechapel Division of the 
Tower Hamlets, as such, know about the cotton 
trade ? To put upon the representative of White- 
chapel the work of arranging cotton matters 
seems very like delegating to churchwardens the 
task of compihng railway time-tables. 

Apart from the numerous activities of the Govern- 
ment in connection with different branches of 
industry, the Government professes to render 
assistance to trade through the Consular Service, 
and such institutions as the Commercial Intelhgence 
Branch of the Board of Trade. The latter is so 
small, and its activities are so minute, that it has 
escaped much criticism, but the Consular Service 
has for years been the butt of writers on trading 
matters. The trouble with these institutions 
arises from a failure to understand the first prin- 
ciples of trade. The only possible way to deal with 
the trading problem is, as I have already said two 
or three times, to take it trade by trade," one trade 
at a time. 






The stupid idea that some unfortunate official, 
sent at the public expense to a distant part of the 
world, can be of any real assistance to all the varied 
interests covered by British commerce, requires 
to be abandoned. The Consul, especially in a 
foreign State, is there for the purpose of attending 
to the formalities connected with passports, bills 
of lading, registration of births, deaths, and 
marriages, and other similar details. It is quite 
erroneous to suppose that he can do anything 
worth the name in the promotion of British trade. 

The failure of the Commercial Intelligence 
Branch to give commercial intelligence that is 
worth having is now admitted in the announce- 
ment that was made last November, that any in- 
quiries for information of importance will be sent 
to the Imperial Institute, while the Commercial 
Intelligence Branch will continue as heretofore to 
give immediate replies to any inquiries for goods 
that are well known or easily obtainable. If every 
trade were properly organised, each would have 
its own commercial intelligence branch, staffed 
by men who understand the trade and who alone 
are able to collect such intelligence as is wanted 
by each particular industry. 

The relations of the Government to trade want 
putting upon an entirely new basis. A new national 
organisation should therefore be established which 
will retain all the sterUng qualities of our present 
system, and add to them the necessary force to 
ensure greater activity. 

" The improved organisation that is now sug- 
gested would contain nothing that is new or un- 
tried. It would consist of natural developments 
of what already exists. Employers and work 
people have organised themselves into associations 
and unions ; some of these have developed federa- 
tions of similar or even of unconnected interests, 
and both parties have their national congresses, 
or at any rate, the germ of them. The demand 
now is that the organisations already in existence 
be perfected."! 

In considering the possibilities of a connection 
between the State and trade, the question of in- 
itiative arises. I am frequently told that the first 
step should come from the trades themselves, that 
there ought to be a general demand on the part of 
the trade unions and associations for Government 
recognition and help. I believe that the initiative 
must come from the Government. Manufacturers 
are interested in prices, workpeople are interested 
in wages, and both have done a great deal to pro- 
mote their respective objects. I suggest that there 
is a more important interest in trade than either 
of these two, the interest of the nation, and that 
the nation as Third Partner should take active 
steps to promote that interest. 

* Professor Kirkaldy. 




" The readier we are to cut away from the past, 
the better are we likely to succeed," says Mr! 
Lloyd George ; and in attempting to study the 
question of trade it seems to me that one of the 
first things to do is to clear the mind of several 
old ideas. August, 1914, marked the end of the 
trading world as we knew it. Certainly in matters 
like money or production, the terms and figures 
with which we were familiar are now useless. 
We are already doing all sorts of things which a 
couple of years ago would have been scouted as 
impossible. I remember a conversation with a 
financier in the autumn of 1914, who gave me the 
comforting assurance that the war must come to 
an end in the first few months of 1915, for the simple 
reason that by that time all the available money 
would have been used up. Since those days we 
have all learnt that there is no such thing as money : 
it turns out to be nothing but a lot of book entries 
in a bank. A Government which within the re- 


collection of each of us was content with £90,000,000 
a year, now spends nearly £3,000,000,000 a year ; the 
ammunition which was sufficient to carry through 
the whole of the South African War is now used 
up in a few days, and everything is altering in the 
same sort of proportion. 

Does it not, therefore, become needful to recog- 
nise that old arguments, old theories, and old 
standards do not necessarily apply to the present 
or the future ? 

We have for generations occupied ourselves with 
discussions on work and wages. I submit that 
that subject now becomes a comparatively minor 
issue. We are face to face with the much greater 
question of our very existence as a trading nation. 
The problem to-day is not only the distribution of 
wealth, but, even more important, the actual 
making of wealth. Writing in 1843, Carlyle de- 
clared : — 

" This largest of questions, this question of work 
and wages, which ought, had we heeded Heaven's 
voice, to have begun a generation ago or more, 
cannot be delayed longer without hearing earth's 

For over seventy years we have continued " this 
largest of questions, this question of work and 
wages," and if one is to believe some of the debaters 
on the matter, very little progress has been made 
with it. 

I think that most of the discussions on this 
subject in the past have missed the real point. 




Too many students of economics have a way of 
dealing with money or with goods as if they were 
fixed quantities, and for seventy years they have 
argued about the possession of these supposed fixed 
quantities, with the result that we are still in the 
stage that Carlyle had reached in 1843. Far too 
little attention has been paid to the question of 

Wages and profits are one and the same thing. 
There should be no antagonism between them : 
they are wrongly conceived as robbing one another. 
They both depend upon output and organisation. 

Perhaps, before proceeding further, it would be 
well to define the scope of our inquiry into trade, 
to define what we mean by trade and com- 
merce. Some people, especially politicians, are 
incHned to think that when they deal with railways, 
shipping, insurance, banking, weights and measures, 
bankruptcy laws, patents, trade marks, and various 
other general commercial questions, they are dealing 
with trade. But these things, although of the 
utmost importance, are really only incidents of 
trade, by which term we shall mean the selling and 
making of goods. 

Note the order in which I place these two 
functions. The law of supply and demand re- 
quires first a demand and then a supply, but 
the word " demand " used in this connection is, 
I think, unfortunate. It is at least open to a good 
deal of misconception. There is room for a new 
branch of economics which would recognise that 



the problems of selling rival in importance the 
problems of production. This point has a vital 
bearing on many questions. The limitation of 
output by Trade Unions was justified by the fear 
of a glut due to inability to dispose of the work 
produced. A glut of manufactured articles is 
only possible where there is failure in the selling 
part of the organisation. 

To bring the law of supply and demand right 
down to modern conditions, one example will 
suffice — the American typewriter. If you will 
take your minds back to the days when the American 
typewriter manufacturers were attempting to in- 
troduce their wares into this country, you will 
remember that they were received with small 
favour. The most aggressive advertising, the most 
elaborate selling schemes, armies of travellers, 
machines on free trial, and all sorts of devices, were 
adopted to persuade the conservative Britisher 
that it was desirable or advisable to use a machine 
for the purpose of writing. Less than twenty 
years have been sufficient so to alter the position, 
that the trader who declines to use the typewriter 
cannot even get his correspondence read. 

Now if the American had accepted the usual 
British interpretation of the law of supply and 
demand, this country would be without its type- 
Nvriters to-day ; but the people at the back of that 
movement recognised that that law was not only 
concerned with some urgent demand which existed 
by nature, but that it was possible to create a 




demand and then provide the supply. We have 
to stretch our imagination to the day when every 
Chinee will be on the 'phone, every Patagonian 
baby will need a perambulator, and every Zulu a 
motor-bicycle. The interest of the State in trade 
is that we should supply such goods instead of the 
German, the American or the Japanese, and the 
question for the State to answer is, "How are 
these things to be done, and who are the people 
to do them ? " 

There is one other old idea that wants careful 
examination. If one is to beheve the newspapers, 
we are all engaged in giving up old shibboleths, 
discarding old fetishes, and I think that the fetish 
of the consumer has had its day. There is some- 
thing which appeals to the soul of an economist in 
the consumer, while the poor producer is almost 
invariably a rogue. Surely, judged by national 
values, the producer is more important than the 
consumer. I have great hopes that the experience 
of the last couple of years will have enabled us to 
form an entirely different conception of the respec- 
tive positions of the producer and the consumer. 
In the supposed interest of the consumer, we have 
as a nation done everything that was possible to 
discourage, thwart, hamper, and, indeed, abuse 
the producer. I suggest that there is a subject 
here which might be re-stated with advantage, 
and it might be possible to show that the true line 
of economy, the line of the greatest good, and the 
line of real cheapness, is along the road of en- 





couragement for the producer and comparative 
disregard of the consumer. 

The attitude of the past has been an attitude of 
antagonism to every form of trade association or 
any attempt on the part of manufacturers to com- 
bine or co-operate, while nothing but blessings have 
been poured upon .the head of everything in the 
nature of an association of consumers, co-operative 
societies, and the Uke. 

Then there is the question of the State's interest 
in industry. The professors who have provided us 
with the literature of economics pay all too little 
attention to this side of the subject. The distri- 
bution of wealth has filled columns : the creation 
of wealth inches. 

It seems to be nobody's business to inquire why 
typewriters should all be made in America, or (until 
the war) optical glass in Germany. Our industries 
have come to us by accident, not as a result of any 
effort on the part of the State. A local authority 
is set up to see that the infant mortality rate of 
Guildford is kept low, but no authority exists to 
regulate the death-rate in the fancy leather trade. 
The public police force sees to it that we do not 
steal each other's watches, but if the Japanese 
steal our best-known trade marks and thus filch 
our Indian customers, the nation takes no cognisance 
of the matter. The nation insures the working man 
against influenza but does nothing to insure his 
means of livelihood against German Cartels or 
American Trusts. 



Official Trade Councils will provide the State with 
the means to guard and secure the national interest 
in industrial prosperity. 

To recapitulate these five points. First, we have 
to start thinking in terms and quantities which are 
entirely new. Second, the problem is not only a 
question of work and wages but of our national 
existence ; not only the distribution, but the crea- 
tion, of wealth. Third, we have to recognise that 
of equal importance to supplying the demand is 
the work of making the demand. Fourth, the 
relative national values of consumer and producer 
may require to be reconsidered. Lastly, there is a 
State interest in trade which has not hitherto been 


Within the last few years there has arisen from every 
quarter a demand for organisation. Many years 
ago John Stuart Mill said : — 

" The peculiar characteristic of civilised beings is the 
capacity of co-operation ; and this tends to improve by 
practice and becomes capable of assuming a constantly 
wider sphere of action." 

The subject was made fashionable in August last, 
by Mr. Asquith, who, speaking in the House of 
Commons, laid particular emphasis on the develop- 
ment of trade associations for common action at 
home and abroad and for raising the average 
standard of production. 


" The speculation of the time," says Professor MacGregor, 
" is round the problem how far or how much farther the 
method of industrial grouping and the aspirations of 
associated Hfe can be carried. While at the beginning 
of the century the problem was to find a hearing for the 




advocates of combination, at the end of it the problem 
of legislators and teachers is to guide the movement. 

" Since it is evident that many of these defects of in- 
dustrial competition are due to separateness of organisa- 
tion and policy, it is a matter of course that combination 
or a further degree of combination is necessary to their 
remedy. . . . Any common government of tliis kind will 
tend to prevent not only those depressions which come 
from over-trading under the influence of competition and 
risk, but also those forms of panic that are due rather to 
the fear of bad market conditions than to actual conditions."* 

The authors of " The Elements of Recon- 
struction " say : — 

" The ruling idea to adopt in our national policy, 
the idea about which the rest of our policy can be 
built as a body is built upon a backbone, is the idea of 
national syndication, the idea of grouping and amalga- 
mating our industries, our food supply, and our labour 
organisation, upon a national scale. Only upon those 
lines can we hope to make our industries scientific and 
progressive, defeat foreign competition, secure a satis- 
factory home food supply, and come to an understanding 
and keep the peace with labour. The alternative to such 
a reconstruction boldly and openly planned and carried 
through, is decadence and Imperial disintegration. . . . 

" Our view is that these great economic syndications 
upon a national scale, which is the only possible means 
of saving and developing the British Empire against the 
dangers and competition which threaten it, must be settled 
and can only be settled with the understanding, participa- 

1 <( 

The Evolution of Industry." 


tion and consent of both labour on the one hand, and the 
existing proprietors, directors, and managers concerned 
in these economic systems on the other. It is absurd to 
suppose any sudden and violent change of system in these 
things; the arrangements of yesterday are the only 
possible material we have for the arrangements of to- 
morrow. We want to see labour inspired and stimulated 
by our new sense of common needs, in conference with 
capital, quickened by a sense of extreme national danger, 
upon these great constructive projects." 

Lord Milner, in an Introduction to these letters, 
says : — 

" We seem to be more than ever in need of a synthesis, 
of some unifying principle, else we may easily find our^ 
selves pursuing a number of ends which, though perhaps 
individuaUy commendable, are incompatible with one 
another. . . . From the heart of the business worid 
Itself come the most urgent warnings against excessive 
unregulated competition and the loudest appeals for 
organisation on co-operative hnes and for the helping 
hand of the State." 

Mr. Harold Cox, in an address to the Institute of 
Civil Engineers, declares : — 

" Just as we cannot afford to leave to individual enter- 
prise the defence of our country against war. so we cannot 
trust to individual enterprise alone to solve the industrial 
problems that will follow the establishment of peace. 
There must be some kind of collective effort to deal with 
problems of such magnitude as these will prove themselves 
to be." 



Sir William McCormick, in his Report upon the 
work of the Advisory Council, says :— 

" We wish to point out that there are specially strong 
reasons for more co-operation between the various British 
firms in each industry and between the industries and the 
State in the furtherance of research. . . . Organisation 
can only be fought by counter organisation, and so long 
as the Englishman treats his business house as his business 
castle, adding to its original plan here and there as necessity 
or inclination directs, with his hand against the hand of 
every other baron in his trade, and no personal interest 
in the foreign politics of his industry as a whole, it will be 
as impossible for the State to save him. whether by research 
or other means, as it would have been for King Stephen 
to conduct a campaign abroad. In the main the State 
can only effectively help those who help themselves. 

" We think it possible that the voluntary efforts of 
manufacturers in friendly union which enabled the problem 
of munitions to be rapidly solved, may lead to a new kind 
of reciprocity between firms which will avoid the evils 
both of monopoly and of individuaUsm. ... The forces 
which are at work in this direction have elsewhere found 
their expression in connection with the Trust and the 
Combine, but we believe if the real nature of these forces 
is clearly grasped that it will be possible to organise them 
for the benefit not only of the industries but of the nation 
as a whole." 

One could multiply indefinitely quotations of 
this kind, but the following short selection will 
suffice to show how the same idea is running through 
many brains— brains which, it will be noted from 


the names given, do not always or often think in 
the same direction. 

The late Lord Mayor (Sir Charles Wakefield), 
at a Meeting of the Engineering Industry at the 
Mansion House on September 20th, 1916 : — 

" How to make the most effective economic use of this 
great group of industries, capable of affording well-paid 
employment for two million workers, is not merely a 
question for company directors and trade union officials ; 
it is a national and an Imperial duty and responsibiUty." 

Dr. William Garnett, in an article on British 
Trade and Applied Science in the Daily Telegraph, 
on January 19th, 1916 : — 

" What machinery have we for the organisation of 
British Industry capable of dealing with all the separate 
trades, and especially with those problems wherein two 
or more trades have a common interest, or would have 
if they realised their true relationship ? . . . Cannot 
such an organisation be created by British Industries in 
the interest of British Industry ? " 

Sir Joseph Compton-Rickett, in the Contemporary 
Review, May, 1916 : — 

" Hitherto our national trade has been left to the enter- 
prise of individuals. They have not had the means at 
their disposal for determining over-production or under- 
production. ... It is only the Govemmwit of a country 
which can efficiently survey the entire field of operation, 
and so co-ordinate the efforts of the commercial world." 



Mr. W. N. Hughes, Prime Minister of Australia :— 

" Let us, resolutely putting aside all considerations of 
party, class, and doctrine, without delay proceed to devise 
a policy for the British Empire, a policy which shall cover 
every phase of our national, economic, and social life ; 
which shall develop the tremendous resources and yet 
be compatible with those ideals of liberty and justice for 
which the men of our race now, in this, the greatest of all 
wars, are fighting and dying in a fashion worthy of their 

Sir Algernon Firth. President of the Association 
of Chambers of Commerce, in The Times Trade 
Supplement," April, 1916 : — 

" We have had no constructive Imperial poHcy with 
regard to trade and commerce, nor any organised attempt 
to develop our trade and protect industries of vital im- 
portance to the country. . . . What we have now to 
do is to exert ourselves in an ordered, practical, and deter- 
mined manner in order to maintain that leading position 
in the commerce of the world which we have held for 
so long, and which is vital to our continued extension as 
an Empire." 

Mr. Steel-Maitland,' M.P., Under-Secretary for 
the Colonies, in an Inaugural Address at the Glasgow 
School of Social Study and Training, October 13th, 
1916 : — 

" The responsibiUty for the solution hes upon all the 
people, because the task after the war is to try to organise 


our relations internally, inter-imperially, and internationally, 
as a democracy, with the same science and skill as hitherto 
have been given to an autocracy. To do this above all 
we need knowledge, and with knowledge we must combine 

Sir Leo Chiozza Money, M.P., in the Evening 
Standard, July 24th, 1916 : — 

" The value of association in industry has been recognised 
in nearly every branch by the formation of Federations 
of Manufacturers. It would be a practicable and sensible 
step to give official recognition to all responsible trade 
organisations. . . . The war has proved how helpful 
State organisations can be even to the most enterprising 
private adventurers. It would have been absolutely 
impossible to have attained to the remarkable output of 
munitions which is now actually taking place if the matter 
had been left to competitive enterprise." 

Mr. H. Wilson Fox in The Times, September 
28th, 1916 :— 

" Can it be right to continue to pursue a purely passive 
State poUcy, and to allow all our national resources to be 
dealt ^\^th by individuals in a haphazard and uncoordinated 
manner without regard to State needs and State oppor- 
tunities ? It certainly cannot be right to assume that 
what is must be, and that directions in which State 
capital and management can be employed directly with 
advantage for the production of wealth cannot be 




h. 'F 

Sir George E. Foster, Minister of Trade and 
Commerce, Canada, in the Canadian Gazette, August 
3rd, 1916 :— 

" We must in all ways fit ourselves in this Empire to 
meet rivals from whatever quarter they come — be as 
intelligent, skilful, resourceful, ready in organisation and 
as fully mobihsed as they can be, and, if possible, more 
so. . . . After peace comes, there will be all the greater 
necessity for getting together, working together, thinking 
together, with one common ideal and one common pur- 

Professor A. W. Kirkaldy, in a Presidential 
Address to the Economic Science and Statistics 
Section of the British Association : — 

" As the war developed there has been a growing tendency 
to demand organisation in every sphere of national life. 
... Business, hke everything else, is subject to evolu- 
tion, and evolution on healthy lines can only be obtained 
by grasping fundamental facts and applying experience 
in accordance with economic laws. There need be nothing 
revolutionary about the required changes in our business 
organisation, ^^e merely have to note what has already 
occurred, mark healthy tendencies, and clear away or 
prevent obstructions to natural growth." 

Professor J. A. Fleming, in an Address to the 
Society of Engineers, on May ist, 1916 : — 

" No one who has studied even casually, the German 
methods can fail to admit they have realised fully in com- 
mercial matters that union is strength. . . . Our ideal 

has been largely individualism and competition, theirs 
has been organisation and co-operation. . . . The first 
condition of success must be association and combination, 
and the second the scientific method in all things." 

Mr. George H. Roberts, M.P., in the Evening 
Standard, October 20th, 1916 : — 

" It is encouraging to observe the many signs of awaken- 
ing to the fact that our industrial system was deficient in 
many respects. . . . Employers are realising the necessity 
to utilise in larger degree the discoveries of science, together 
with greater initiative and better organisation of pro- 
cesses. . . . British brain, skill, and ingenuity have 
proved equal to the world's greatest emergency. British 
labour also is capable of as high efficiency as the world 
contains. With cordial co-operation national productive- 
ness can be almost indefinitely expanded." 

Dr. Dugald Clerk, Chairman of the Council of 
the Royal Society of Arts : — 

" It is necessary that we should as a nation, recognise 
more fully the importance of co-operation and coordina- 
tion in both abstract and applied science. We are intense 
individuaUsts and our great success in the world is largely 
due to that quality ; it has, however, its drawbacks, and 
we have arrived at a stage of development in both science 
and industry where united effort would aid us rapidly to 
improve our scientific and industrial position." 

Mr. Sidney Webb, in the New Statesman, 
April 28th, 1917 : — 

" A survey of the whole field makes it clear that there 
is a very real, and, as we venture to think, an ever-widening 




sphere for the Professional Organisation of brain-workers 
in the Control of Industries and Services in the modern 
State, although not exactly the sphere to which its most 
enthusiastic adherents have aspired." 

Professor Ripper, Vice-Chancellor of the Univer- 
sity of Sheffield, at the Royal Society of Arts 
on May 9th, 1917, spoke of 

" The national organisation of our industries, each in- 
dustry being represented by its own organisation and 
association, and the whole centreing round a Government 
Department of Industry and Commerce." 

Such a weighty mass of opinion calls for more 
consideration on the part of the Government than 
the subject has so far received. These and many 
other similar utterances have caused industrial 
interests to come together to an extent never reached 
before, and the movement now cries aloud for 
Government recognition and regulation. 



There are at present before the pubHc dozens of 
well-thought-out suggestions for the organisation 
of trade. 

That which has received most attention in the 
Press is probably Mr. Sidney Webb's " How to Pay 
for the War." Mr. Webb has, so far, confined his 
attention to the railways, the Post Office, the coal 
supply, and one or two other great national services, 
and apart from an obvious and probably intentional 
failure to grasp the problems of profit and loss, his 
schemes are full of interest. But they hardly touch 
what I submit is the far larger question of the 
organisation of trade. Mr. Webb, like so many 
great thinkers on these matters, appears to forget 
that the railway which carries the goods is a 
comparatively small part of the problem of pro- 
ducing and selling. 

Next, perhaps, in importance as a contribution to 
the subject are the letters on " The Elements of 
Reconstruction," to which I have already referred. 
These letters are chiefly useful for their masterly 




criticism of existing institutions. When the authors 
proceed to demoHsh the Houses of Parhament and 
reconstruct a system of representation by trades 
instead of by districts, they appear to me to get out 
of the range of the practical. 

The exhaustive Report of the Garton Foundation 
is full of suggestions which require to be studied. 
The authors of this document, after a full inquiry 
into most of the problems connected with social 
unrest, come to conclusions which are very similar 
to those which are here submitted, and set up 
industrial councils for the control of industry com- 
posed of masters and workmen. 

" The field of action open to these Councils would 
be very great. It would extend, for instance, to :-- 

(a) The suggestion and consideration of 
improved methods and organisation. 

(b) The maintenance of works disciphne 

and output. 

(c) The maintenance of a high standard of 

design and workmanship. 

(d) The education and training of apprentices, 

and the conditions of entry into the 
industry concerned. 

(e) The demarcation of tasks. 

(/) The prevention of unemployment, the 
development of security of tenure in 
the trade, and the decasualisation of 

is) Questions of wages and piece rates. 





" (h) The prosecution of research and experi- 
ment, and, 

" (i) The improving of the public status of the 

Mr. H. E. Morgan, in a book entitled " The Muni- 
tions of Peace," has elaborated a scheme, which is 
at least quite practical, for the establishment of a 
National Trade Agency. This body, which would 
have a constitution very similar to the Port of 
London Authority and other semi-Governmental 
institutions, would take charge of the work of sell- 
ing the product of British industries abroad, would 
supersede the present Consular Service, and organise 
our foreign trade for us. Mr. Morgan's scheme has 
the weakness which is common to so many of these 
proposals and so many present-day movements, 
that it attempts to deal with all trades and ignores 
the fundamental principle that the only way to deal 
successfully with trading problems is trade by trade, 
one trade at a time. 

Then there is the movement known as Guild 
Socialism, and a whole series of books among which 
that by Farrow and Crotch on " The Coming Trade 
War " demands attention. These authors lay them- 
selves open to the criticism that they devote too little 
attention to the improvement and organisation of 
our internal arrangements and too much to the ques- 
tion of tariffs and protection against foreign compe- 

Mr. Wilfred Stokes, President of the British Engi- 


neering Association, in a pamphlet which bears the 
same title as Mr. Sidney Webb's book, although it 
was published long before the latter, sets out the 
case for a Board of Industry. He would have a 
permanent President, some man of great business 
abihty. with the rank of a Cabinet Minister, assisted 
by fifteen leading men of business as a Council 
representing the industries of agriculture, banking' 
bmlding materials, chemicals, cutlery, electricity' 
engineering, foodstuffs, hardware, iron and steel 
leather, paper, railways, shipping, and textiles. To 
this Council he would add one representative each 
for our Overseas Dominions. There would be a 
Parliamentary Secretary, a Permanent Staff with 
attractive salaries, and a large staff of Trade Com- 
missioners and Trade Correspondents in each ol the 
Dominions, Colonies, and foreign countries. 

vSir Leo Money, in discussing the need for a Minister 
of Commerce in the Evening News of July 24th. 
1916, said :— " How is a practical means to be 
devised for such a Ministry to keep in practical 
touch with our industries ? A means Ues ready to 
our hand. The value of association in industry 
has been recognised in nearly every branch by the 
formation of federations of manufacturers. It 
would be a practicable and sensible step to give 
official recognition to all responsible trade organisa- 
tions, and for the Ministry of Commerce to have 
statutory powers of representation upon their execu- 
tive committees. There is no reason why we should 
not go further and see to it that every firm engaged 



in an industry becomes a member of the trade 

But by far the most important of all these sug- 
' gestions is that which is made by the Committee of 
the British Association which dealt with the subject 
of indus'trial unrest, and which reported to the 1916 
meeting through its chairman, Professor A. W. 
Kirkaldy. For the improvement of existing 
industrial organisation they suggest that : — 

" Employers should be organised into — 

" (a) Associations of one trade in a given 

" (b) National Association of one trade. 
" (c) Local Federations of trades. 
" {d) National Federations of trades. 
" Of these [h) and (d) would be organised under 
a system of representation. 

" Workpeople should have unions and federa- 
tions corresponding to those of the employers, and 
in both cases the National Federations should be 
carefully organised councils enjoying a large measure 
of authority, tempered by the necessity to win and 
preserve the confidence of their electors. 

" From these two representative bodies there 
could be elected an Industrial Council as a Court 
of Appeal, representative of the whole industrial 
activity of the country. So far as these various 
bodies were approved by the State they would 
enjoy far-reaching powers. 
" Approval by the State should depend on the 


observance of moderation and the working in 
conformity with carefully devised regulations. For 
the State in this matter would be the representa- 
tive of the consumer and of the national interest. 
Under this system, workpeople would enjoy all 
the advantages aimed at by the extreme party 
such as the syndicalist, but the dangers and risks 
inseparable from a revohitionary policy would 
be avoided." 

The Builders' National Industrial Parliament, 
referred to elsewhere, is a scheme which has actually 
materialised. This body brings labour and capital 
together for the general discussion of questions 
affecting the welfare of the industry, and sets an 
example which might well be followed in every 
industry. Mr. Malcolm Sparkes has, undoubtedly, 
attained as near to the ideal as is possible on the 
voluntary principle. It remains to be seen whether 
the Builders' Pariiament, or similar bodies in other 
mdustries, will be able to exercise a sufficient 
influence over their respective constituencies while 
they lack authority and a perfect representative 

Putting all these schemes together, one arrives 
very easily at the conclusion that the theories 
underlying the ideal solution of the industrial 
problem are, first, the adoption by the State of a 
direct interest in the industries of the country, 
and, second, the introduction of the representa- 
tive principle into trade ; and we begin to see the 



true functions of the Government in the matter. 
If Governments would only give up the habit of 
dabbling in actual trading and would confine their 
activities within a proper sphere and make a study 
of some of these suggestions, they would, I think, 
come to the conclusion that their duty is to set up 
in each industry a representative authority, charged 
with the work of promoting the prosperity of that 
industry for the benefit of the nation. 

" Many voices are crying for large and showy 
schemes," says The Times, in a leading article on 
August 5th, 1916. But " a live system must grow 
from within and must have life at the heart. The 
trade organisations that are spontaneously forming 
now point the right way. They are at the heart, 
and they show that it is alive and vigorous. A 
real working system will grow out of them with the 
co-operation of other factors." 

All experience shows that the way of progress 
is the road of combination and co-operation. The 
only question is the particular sort of combination 
which we shall adopt. We can copy America, we 
can copy Germany, and begin a couple of genera- 
tions behind to compete with them in their own 
way. Or we can profit by their experience, coupled 
with our own, and devise a new system of joint 
endeavour on the part of the individual and the 
State, which is better than anything that has been 
attempted in the past. 

In considering the schemes for the reconstruc- 
tion of industry it must not be assumed that sim- 




plicity is necessarily a recommendation. Progress 
m trade involves a continually increasing complexity. 
Success will only be achieved by continual pro- 
cesses of division, separation, and specialisation, 
and the highest forms of industrial development 
will only be reached when every productive 
operation has arrived at the limit of division and 

The history of trade is the history of organisa- 
tion—organisation which started in a very small 
way, which progressed very slowly, and which has 
gradually become more complicated and its develop- 
ment more rapid. Adam was his own farmer, 
tailor, baker, builder, and banker. Organisation 
has gradually raised this standard, and is perform- 
mg what at first sight appears a miracle. It pro- 
vides us all with clothes, food, houses, and other 
necessities, in quantities far in excess of what we 
could ourselves provide for ourselves if we devoted 
the whole of our lives to that sole ot)ject. 

As civihsation progresses, the standard of comfort 
is raised, and every generation demands more 
goods. This demand is a progressive demand 
The mere growth of population makes necessary 
devices and resources for a gross increase in the 
volume of goods made, while the raising of the 
standard of comfort intensifies the need. 

The organisation of industry is the reply to this 
problem. The present-day workman works less 
hard than did his predecessor, while, at the same 
time, he consumes far more goods. The problem 



of the future is not to make everybody work harder, 
but so to arrange their efforts that the production 
shall be greater. 

A favourite line of argument with a certain type 
of reformer is to point to the wastefulness of a system 
which demands the middleman, the speculator, 
the broker, the agent, and numerous other inter- 
mediaries. We are all familiar with the type of 
Socialist who would cut out everybody but an all- 
providing State and the consumer. 

But the fallacy of this line of argument is exposed 
if you will admit the proposition I have just laid 
down, that the present-day workman works less 
hard than his predecessor and consumes more goods. 
The natural course of trade will be to multiply 
intermediaries. As organisation and science are 
better imderstood and practised there will be more 
middlemen, more thinkers, more inventors, more 
designers, more speculators, and more managers 
than ever. 

A system which aims at the elimination of all 
these intermediaries is a backward movement and 
not a forward movement. As trade becomes more 
and more complicated, more and more divided, as 
new industries arise, as old industries are spUt into 
parts, the little man who does nothing but keep his 
office and think will become more and more of a 
national necessity. This little man, who has the 
chance of a fortune and the fear of bankruptcy 
always in front of him, is an enormous asset. He is 
responsible for most of the progress the world has 




made in the past, and any system which aims at 
his ehmination is, I submit, a bad system. 

The problem is to organise all these people, to 
make the greatest possible national use of them, to 
encourage and help those processes of development 
in which they are engaged. 




Successful organisation of industry is out of the 
question imless the co-operation of labour can be 
secured. Satisfactory working arrangements with 
labour can never be made until bodies representing 
capital and management of equal standing with the 
trade imions have been brought into existence. 
The estabhshment of thoroughly representative 
trade associations and unions wo\:dd make possible 
the creation in each industry of governing or con- 
trolling bodies composed half of masters and half 
of men, Trade Councils, which would be responsible 
to the Government for the welfare of each trade. 

The demands of labour are generally erroneously 
expressed as demands for money — wages. 

Finance has for too long been supreme in the 
commercial world. The so-called money market 
occupies a position far too important. It is in effect 
nothing more than the counting-house of industry. 
It is composed of a lot of superior book-keepers who 
enter up milhons on both sides of the ledger and call 
it money. Ninety per cent, of this money does not 





exist at all. Money has been aptly described as a 
foot-rule for measuring goods and services. The 
workman gets an exaggerated idea of the importance 
of money because in his case the bulk of his turnover 
actually passes through his fingers in the shape of 
coinage. But the demand of labour is not only 
for money : it is first for Status, and secondly for 
boots, beef, bicycles, omnibuses, or any other form 
of goods or services. These things all necessitate 

Our position during the war makes the study of 
this problem somewhat easier. There is a limited 
supply of every class of goods and services available 
for consumption. With care we are just able to 
make our supplies satisfy our needs. If by a stroke 
of the pen everybody's income were at once doubled 
in so-called money, it would not make one atom of 
difference to the comfort or to the real wealth of any 
of us. The only way in which we can help the 
country and help ourselves to-day is to produce. 

I wish some way could be found of clearing this 
question of money right out of the way. It is a 
false issue. There is authority for regarding it as 
the root of all evil : it is certainly the root of all 
confusion. In the very earliest days business was 
conducted by direct exchange of goods without the 
intervention of money. The next stage was the 
introduction of a means of exchange in the shape of 
metal talHes. We have now reached the stage when 
by means of banking systems we have almost entirely 
dispensed with the tally, and the whole thing is 



done by book-keeping entries. I do not know 
whether it is possible that in the future some system 
may be developed which will enable us definitely 
to dispense with those incumbrances now called 
money. At all events, in discussing problems like 
this, it is of the utmost importance to get the idea 
of money into its proper place in relation to the 

The great brains that are directing the Labour 
Movement understand this point, and some inter- 
esting changes are noticeable. The claim of labour 
used to be for money. It then became a demand for 
a bigger share in the proceeds of industry, and 
latterly a more advanced plea is put forward for a 
share in the control of industry. 

Mr. Harry GosUng, in his Presidential Address 
to the Trades Union Congress, used this phrase : — 
" Would it not be possible for the employers of this 
country to agree to put their businesses on a new 
footing by admitting the workmen to some partici- 
pation, not in profits but in control ? " That is 
the very latest demand of the highest authority 
in the labour world. 

The Report of the Garton Foundation recognises 
this demand and calls it a question of status : — 

*' The great obstacle to co-operation is the ques- 
tion of status. The ill-will of Labour towards 
Capital and Management is not wholly a question 
of their respective share of earnings. Friction 
arising over the distribution of earnings is in 




Itself due quite as much to a sense of injustice 
in the machinery of distribution as to the 
desire for actual increase of wages. The 
fundamental grievance of Labour is that while all 
three are necessary parties to production, the actual 
conditions of industry have given to Capital and 
Management control not only over the mechanism 
of production, but also over Labour itself. They 
feel that the concentration of Capital in a compara- 
tively few hands has rendered fair bargaining 
between the parties impossible. A man who leaves his 
work without reason inflicts on his employer a certain 
amount of loss and inconvenience. A man who is 
dismissed without reason may lose his hvehhood. 
While each great firm represents in itself a powerful 
organisation, apart from any Employers' Associa- 
tion to which it may belong, the men employed 
by the firm are solitary units, having no power 
of collective action without calhng in the Trade 
Unions representing the whole of each craft. In the 
last resort the only effective weapon of the Trade 
Union is the strike, and the loss inflicted by a strike 
or lock-out on the CapitaHst Class is not comparable 
with the acute personal suffering of the workmen 
and their families. They feel therefore that in any 
dispute the dice are weighted against them." 

The war has paved the way for a better 
understanding, and already the views of both sides 
are undergoing great modifications. 

"There has been," says Professor Ripper, "an 


enormous improvement in our methods of working, 
as well as in the spirit of wilUngness to work together 
and to co-operate and associate. 

" There is, however, as we all realise, the danger 
that after the war this spirit of co-operation will 
not continue, and that the subjects of dispute 
between Capital and Labour, when the present 
single aim has been removed, will be so many and 
so numerous as to make serious disputes more or 
less inevitable. If the causes of the old troubles 
remain, it is as certain as that night follows day 
that the results will also remain. The causes in 
the past which have led to these troubles have been 
too often similar in kind to those which are respon- 
sible for the great world-war. Prussian Militarism 
is concerned only with conquest, and disregards 
absolutely the human price that is paid to accom- 
phsh its purpose. So in the past our commerce, 
trade, and manufacture have been conducted too 
much without regard to human and neighbourly 
considerations, and for the one object only of profit 
on the one hand, or wages on the other. But both 
these conditions contain within themselves the seeds 
of their own destruction. There are reasons, how- 
ever, for believing that wiser counsels may be, on 
the whole, expected to prevail. The lesson of the 
need of mutual co-operation has been burnt into 
our consciousness during this war as never before, 
and it seems certain that employers and their work- 
men who have fought together as officers and men at 
the Front will return to their work, not to fight each 


other in industrial disputes, but to co-operate to 
bring about a solution of the difficulties which lie 
ahead by joint and friendly discussion. 

" The spirit of co-operation is not a'mere senti- 
ment or theory. It has been as much'a scientific 
necessity for the winning of this war as the provi- 
sion of guns and ammunition, and it will be equally 
a scientific necessity to success in the arts of peace." 

The Builders' National Industrial Pariiament is 
the outstanding practical experiment in these 
matters, among its objects being " to promote the 
continuous and progressive improvement of the 
industry, to realise its organic unity as a great 
national service, and to advance the well-being and 
status of its personnel." 

If labour could be made to see that its real need 
is increased production, all those wonderful powers 
which labour has displayed in its fight against 
capital would be utihsed in solving the problem of 
production. This idea is gaining ground, as is shown 
by an article by Mr. T. E. Naylor, of the London 
Society of Compositors. 

"I suggest to you," says Mr. Naylor, " that the 
time has come when your organisations should cease 
to be merely defensive and resistive, and should 
begin to participate actively in the development of 
industry. Whether this conception is new or not, 
I do not know. I do know that it has never been 
tried; and I earnestly appeal to you to eive it a 
full trial." 



If we put the problems of production in their 
order they are roughly as follows : — 
(i) Education. 

(2) The apphcation of science to industry. 

(3) The elimination of waste. 

(4) The disposal of the product. 

(5) Wages. 

(6) Profits. 

Now the whole nation is interested in problems 
(i), (2), (3), and (4). Labour and capital are equally 
dependent upon their successful solution. Labour 
and capital are equally entitled to express an opinion 
with regard to them, and it is not until they are 
solved that any question of wages or profits can 

I am aware that in practice wages is the first 
charge upon industry and profits the last, but it 
must be recognised that the questions I have men- 
tioned have to be faced before either comes into 
existence at all. These questions have hitherto 
been regarded as the sole province of the manage- 
ment. Neither the individual labourers nor the 
Trade Unions have attempted to take any interest 
in them. I am not now speaking of the management 
of an individual works. It is perfectly obvious that 
in practice some one individual must be supreme 
when the question is the actual working of some 
particular shop. But we are discussing not the well- 
being of particular shops, but the well-being of whole 
industries. The troubles of labour arise very largely 
from the lack of abiUty on the part of the small 




body of masters who have hitherto had to shoulder 
unaided full responsibility for the problems I have 
indicated. If instead of agitating for so many 
shJhngs a week without regard to where these 
shillings are coming from or what they mean 
labour would agitate for the development of some 
market which has hitherto been neglected, it would 
achieve its object more directly and with more 

My demand is on behalf of the nation for the 
fullest possible development of each industry. 
My argument is that everyone engaged in that 
mdustry ought to have the chance to take a hand 
m that development. My theory is that this can 
only be done by the introduction of the representa- 
tive principle into each trade, and the setting up 
of authonties for the study and control of the whole 
trade. On these authorities labour should have 
an equal voice with capital. 

Two quotations will help my argument. Pro- 
fessor Kirkaldy, in the Report of the Committee 
on Industrial Unrest, says :— 

" Some of the workers are asking for much more 
than an increase in wages; they are, in effect, 
asking for a change of status. They are dissatis- 
fied with the status of the wage-earner, and call 
mto question the actual relationship that exists 
in industry to-day between the different factors 
concerned. In fact, workpeople are taking up a 
position which will preclude a mere patching up of 
quarrels, or a mere scheme of wages adjustment. 




What they aim at is a change in the relationship 
between employers and workpeople." 

Professor MacGregor, in '* The Evolution of 
Industry," puts the same problem in this way : — 

" The relation of employment and the system 
of competitive enterprise imply the government 
of the great field of national labour by those who 
are not under the direct industrial control of the 
people. We have to ask whether it is to be the 
settled form of industriaUsm that the policy by 
which goods are made and marketed is to be shaped 
on this non-representative basis, and if the great 
mass of the working producers are to wait for the 
call and to follow the lead of this kind of enter- 

It may be of interest to notice that the same 
problem is agitating the minds of the trading 
community of the United States, and it is particu- 
larly interesting to note that the European War 
and the opportunity for the development of American 
industry which it afforded, was used as an argument 
for further co-operation between capital and labour. 
The Report of the Conference of the National As- 
sociation of Manufacturers of the United States of 
America says : — 

'* May we not hope that both labour and capital 
will come to a prompt realisation of the vast im- 
portance to their interests of the unusual oppor- 
tunity afforded to this country of developing 





S cloir f^P''^'^^" conditions, they will work 
in closer harmony to the same great end ? " 

thi?L w"^" ^°'''''^^'' ^^'^^ '^ '' the object of 
suLrt? K '/''"^"''' "^" ^^-^ '^ study many 

arise with their creation a poHtics in every trade 
a^pohtics m which labour, management, and^c^fai 
will have an equal interest. Education science 
foreign competition, costing systems, standard 

many other subjects, will be debated week by week 
and month by month at the meetings of Ich 
luttes ^'""^' and the numerous subsidiary com 

The opportunity of participating in these dis- 
cussions should do much to remove'that fee^Lg of 
nZ. Y "^ ''"'"' "^^^^ '' ^' th^ bottom of mos 
Tn^e^t rt- ^"i' opportunity would be the 

should tlv ?''^- ^"'^^"^'^ ^'^^^^^ '^^' ^^bour 
should take a share in the control of industry. A 

ve^ long acquaintance with representative masters 

hif ^f ?h i^' ^''' '' ^^"^^^ '^^' "^ore than 
tJJi , f"^ '^ ^^''' '^'^^^ Council debates 
would be found to come from the labour bench 
If It codd be estabhshed as a guiding principle that 

thing, that wages and profits both depended upon 
that welfare, ^d that the representatives of wages 



and profits were equally responsible for that welfare, 
then the whole relations of capital and labour would 
be changed. 

There is no suggestion here that labour or capital 
should either of them sacrifice their independence. 
There is nothing in these proposals which would 
rob the Trade Union of the right to organise a strike 
or the Employers' Association of the right to order 
a lock-out. All that is done is to bring the two 
parties into permanent consultation upon a statu- 
tory body charged with debating, not their differ- 
ences, but those subjects which can be described 
as common ground. Masters and men to-day 
never meet except to discuss the eternal questions 
of wages and profits. They never meet except 
as representatives of opposing and conflicting 
forces. If it were possible to bring them together 
as the joint trustees of the nation in these other 
matters that I have indicated, it would surely be 
found that the differences between them which 
now occupy too much of their attention would 
be capable of adjustment. 

It is of course understood that in the industrial 
development which it is hoped to promote by 
means of these Councils, there must be a higher 
scale of wages than has prevailed in the past. 
This alteration would, in fact, be automatic, be- 
cause in discussing the possibilities of an increase 
of output, the labour representatives on the Trade 
Council would see to it that the profits from that 
increase were properly apportioned. 



Limitation of output, as I have observed else- 
where, IS a crime which must be charged against 
the masters as weU as against the men, and labour 
when It gets a voice in the control of industry will 
be careful to see that there is no limitation of out- 
put with a view to the holding up of prices, a system 
which has robbed the population of many comforts 
that it might otherwise have enjoyed. 

The criticisms of labour on seUing arrangements 
will be interesting and valuable. Labour representa- 
tives on the Trade Councils wiU have a far better 
conception of the needs of the public, and the lines 
upon which manufacture should therefore be de- 
veloped, than the masters. Labour will represent 
m a very true sense the great buying public, and 
the greatest difficulty of the manufacturer in the 
past has been to gauge the likely trend of public 
opinion and thus the probable movements of the 

The moral effect of these elected Trade Councils 
wiU be tremendous, and it is a higher moral tone 
that IS wanted to settle the great capital and labour 
problem. The antagonism of capital and labour 
has a sordid influence upon our pubUc life. If the 
nation would only step in and say to both • " Make 
the public and the national welfare your first care 
and then look after yourselves," the effect would be 
to lift the whole discussion on to a higher plane. 
It should be more generally recognised that the 
employing classes have no monopoly either of virtues 
or brams. Indeed, if it were possible to analyse 




half a dozen workmen and hadf a dozen employers 
it would be found that the workmen would contain 
a higher proportion of the true Christian virtues, 
although the employers might hold the record in the 
matter of church attendances. Give the workman 
the opportunity to know, take him into your confi- 
dence, let him study the real problems of industry, 
make him understand that he is an agent for civilisa- 
tion, and he will not fail to respond. The £ioo per 
head of exports and the £500 per head of produc- 
tion, which we ventured to set before ourselves as 
an audacious ambition, would become a practical 
possibility if the workmen were admitted to their 
proper place in the control of the national industrial 

There is no doubt that the future depends upon 
co-operation between capital and labour. The 
State can now bring this much-desired result about, 
by recognising the organisations of both and uniting, 
them in joint controlling bodies. 






It is a little difficult to reconcile the outcry for 
organisation which we have noted in a previous 
chapter with the fact that there are in existence to- 
day thousands of associations and societies whose 
main object is presumed to be the organisation of 
trade. The war has brought an enormous acces- 
sion of strength to this movement, and every new 
Government Order brings fresh members to some 
trade union or trade association. 

Leaders of thought call aloud for organisation, 
traders flock to join their federations : and yet we 
are not organised. Why ? 

A certain President of the Board of Trade in a 
recent private conversation supplied the answer 
to this conundrum. " A difficulty arises in connec- 
tion with some article," he said, " and after studying 
it I send for the officers of the trade association 
affected. I hear their views ; they convince me of 
the wisdom of a given hne of action, and accordingly 
I make an Order and congratulate myself on a good 
day's work. But no sooner is the Order published 



than fifteen other bodies of whom I have never 
heard before begin to bombard me. They insist 
that the people whom I have seen do not represent 
them, that I have been ' had ' by the wrong lot, 
and that I ought to have made an Order in the 
contrary sense to that which I have adopted." 
This perfect picture of what happens daily in 
. almost every Government office sums up the whole 
difficulty. The trouble can be expressed as the 
absence of the representative principle. In trade 
nobody represents anybody. The position was 
accurately stated by Mr. W. L. Hichens, Chairman 
of Messrs. Cammell, Laird & Co., in an address to 
the Incorporated Association of Headmasters when 
he said that " he could not claim that his 'views 
represented those of the business world. Indeed 
he did not know what the views of the business 
world were, for as things were constituted to-day 
there was no means of ascertaining the collective 
opinion of the business world on any given subject." 
A glance in passing at the present position of the 
trade association movement in the United Kingdom 
and elsewhere will enable us to form a better judg- 
ment on the suggestions for a system of Statutory 
Trade Councils, Unions, and Associations under a 
Minister of Commerce, which it is the object of the 
present writer to promote. 

The greatest difficulty which confronts the 
orgamser of a trade association in this country is 
the pecuHar characteristics of the Briton. He has 
been for so long accustomed to play his own Uttle 



hand that he does not take kindly to the idea of 
co-operation. But among the many changes which 
have come over us in the last two years, one of the 
most marked is a greater wilhngness to co-operate, 
and to work in union with others. The difficulties 
of carrying on business at all in a state of war have 
forced many business men to seek the help of fellow- 
traders. As a result the association spirit is more 
strongly developed to-day than ever before, and it 
is possible to put forward a suggestion like mine, 
which almost amounts to compulsory membership 
of a trade association, when two years ago such a 
suggestion would have been entirely impracticable. 

The existing associations divide themselves natu- 
rally into two chief classes. First, there are those 
like Chambers of Commerce which are concerned 
with all trades, and secondly, the particular trade 
association which deals with the interests of one 
particular industry. 

There is another later development, an attempt to 
federate trade associations. This, however, does 
not appear to have met with much success. There 
is already a very powerful federation of Trade Pro- 
tection Associations, societies which are concerned 
with the giving of credit and the collecting of debts, 
and the winding up of bankrupt estates. These 
Trade Protection Associations, however, must not 
be confused with the class of trade associations we 
are discussing. 

The British Empire Producers' Organisation is 
a body of some importance which aims at securing 


the adhesion of the various trade associations of 
the country. The Federation of British Industries 
is a stiU more pretentious movement. This started 
after the outbreak of war as the Institute of Industry 
and had the advantage of a speech from Sir Edward 
Carson at its inaugural luncheon. It subsequently 
became the United British Industries' Association 
and was widely advertised on account of the fact 
that it required ;f 1,000 subscription. Its latest 
title is the Federation of British Industries, and the 
subscription has, I understand, become £100, 

When we come to study the trade associations 
proper, we find some thousands of bodies with very 
varying objects. At the head of the hst should be 
placed a group of strong societies which I class 
together as Price Associations. They are most of 
them the work of a clever body of accountants in 
Birmingham, who have succeeded in getting the 
Bedstead Trade, the Light Castings Trade the 
Fender Trade, and probably a dozen other industries 
into well-organised combines, and in regulating the 
pnces of the output. These combines exist admit- 
tedly for the simple purpose of the regulation of 
prices, and while in some cases they do other useful 
work the basis of their organisation is price main- 

Some of these associations have the most inter- 
esting arrangements with labour. The Bedstead 
Federation is notable in this respect. Not only have 
they succeeded in satisfying labour with a shding 
scale based upon the market price of bedsteads, but 



they admit the labour leaders to a share of the control 
of the industry, and in that way arrange a complete 
boycott of non-associated firms so far as labour is 


Passing from these Price Associations, the next 
most important series consists of those societies 
which have their being simply for the purpose of 
fighting labour. After these comes a variety of 
bodies, some of them local, some of them national 
in their activities, and most of them having special 
objects arising out of the peculiar needs of their 
particular industries. 

Another class of movement is to be noticed in 
local activities. For instance, we get the City of 
Nottingham appointing an Industrial Council and 
an Industrial Development Officer. 

But the latest and the most interesting trade 
association is to be foimd in connection with build- 
ing. There has within the last few months been 
estabhshed a National Industrial Parliament for 
the building industry. This body is to have the 
support of most of the trade unions connected with 
building as well as of the masters' associations. It 
is the most serious and the most promising effort 
that I have come across for the settlement of out- 
standing differences between capital and labour. 
It remains to be seen whether as a purely voluntary 
body the Builders' Industrial Parliament is open to 
the danger which has proved fatal to most voluntary 
bodies, that it depends^ipon the energies and enthu- 
siasm of its promoters and their successors to keep 



it in being ; whereas if it could become a part of our 
constitutional arrangements, be continually subject 
to the introduction of new life by the process of 
election, its future and its continued usefulness 
would be assured. 

Looking broadly at the whole Association Move- 
ment as it is to-day, one must come to the conclu- 
sion that it is a failure. The only bodies that can 
claim any real practical achievement are the 
" Price " Associations, and these are obviously 
of a dangerous and undesirable nature. The first 
necessity is lacking in all other cases. The prime 
essential in any public body is an element of 
authority, a status, a definite responsibility. 

This essential is provided when prices are taken 
in hand by the creation of a pool, with fines and 
penalties and other conditions, but those societies 
which do not go the length of that process, lack any 
means to keep the trade together, to secure respect 
for their decisions, or even to secure the nominal 
adhesion of the majority of their constituency. 
These conclusions are drawn not from a few isolated 
cases, but from a full study of the whole extensive 
movement. The result is that trade associations 
crop up and die down with a rapidity and regularity 
which is both perplexing and discouraging to the 
behever in co-operative action. The need for asso- 
ciation is felt and admitted by all, and yet the failure 
of associations in trade cannot be seriously disputed. 
It is for the Government to give the answer to this 
conundrum. If trade organisations were recognised. 



if they were put upon a representative basis, if they 
were made part of the constitution under which we 
live, they would prove to be the most valuable of 
all the public authorities. 

British trade associations, taken as a whole, 
suffer by comparison with German and American 
bodies in exactly the same way that British in- 
dividual businesses often compare unfavourably 
with more recently established concerns in newly 
developed countries. There are among them so 
many different grades. They have not had the 
advantage of recent establishment upon the most 
approved system. Nevertheless, there is the basis 
of a national system of trade association, a basis 
upon which the Government should build the 
national trading machine that is now so urgently 

The present position is very admirably summarised 
in an article on Capitalism after the War, that 
appeared in the New Statesman of February 3rd, 
1917 :— 

" Another development of capitahsm, to which 
the Government is extending no little encourage- 
ment, is the systematic association of all the 
manufacturers of an industry into a single body, 
for the collective management of the whole industry 
within the United Kingdom. The Committee of 
the Privy Council for aiding scientific and industrial 
research finds considerable difficulty, without such 
associations in the several industries, of getting rid 
of the million sterling which the Government has 



allocated for this purpose. The secretive methods 
of the various employers within an industry, each 
anxious to reserve for himself all the advantages 
from which he can possibly exclude his British 
rivals, place all alike at a disadvantage against the 
well-organised Cartel or Trust which, in Germany 
or the United States, so often controls the whole 
of the national output. It would be much more 
convenient to the Government, it would faciUtate 
the employment of scientific experts and enable 
experiments to be conducted, if all the competing 
firms would combine, at any rate for specific pur- 
poses. They might unite, it is being authoritatively 
suggested, for representation in foreign countries, 
and agree to ' pool ' their export trade. 

" The active encouragement of the Government 
to this pohcy of an associated industry is 
now being manifested by all departments in all 
sorts of ways. Association is accordingly pro- 
ceeding at a great rate. Sometimes what is 
formed is a mere scientific society, for promoting 
research and experiment for the common benefit 
of all the manufacturers in the industry, 
and for putting up a fund from voluntary 
subscriptions to meet an equivalent Government 
grant. Such a scientific society of manufacturers 
in a single industry very quickly takes on other 
functions, and easily becomes the starting-point for 
price agreements, pools, and eventually a Cartel or 
a Trust. 

" Now, this steadily progressing substitution of 


Trusts, Cartels, or mere associations of particular 
industries for the crowd of jostling competitors on 
whom we have been accustomed to rely— a sub- 
stitution which the Government is now half- 
consciously fostering— is, doubtless, an inevitable 
development. In so far as it means the substitution 
of dehberate order and system, knowledge and 
prevision, for the 'happy-go-lucky,' hit or miss 
ventures of the capitahst entrepreneur of the last 
century, the change is one to be welcomed. Com- 
bination for buying materials, for scientific research, 
for standardising components and products, for 
obtaining new markets, for advertising, for represen- 
tation in this country and abroad, promises very 
considerable economies, not only in cost, but also 
in the continuity of production that it permits. 
We cannot afford, as a nation, to continue the waste 
that is involved in individual competition. 

" But individual competition, as it has been acutely 
remarked, is the consumer's substitute for honesty 
in the producer. Competition, expensive as it may 
be, does at least purport to protect us against 
having to pay more for an article than its actual 
cost of production and normal profit. If we are, 
as a nation, to be deprived of this substitute for 
honesty, with the consent and even the assistance 
of the Government, we ought to ask the Government, 
Very insistently, how it is proposed to prevent the 
new monopoHes from putting up their prices — as we 
have already found happening in the case of sewing 
cotton— and thus subjecting the whole population 



to an unnecessary taxation, which is likely soon 
to rival in magnitude even that of the Government 
itself. Will the Government insist, with regard 
to all these combinations, on something in the 
nature of the ' sliding scale clauses ' imposed on 
gas companies, whereby every increase in the 
dividend to the shareholders is made dependent 
on an equivalent reduction of price to the con- 
sumer ? It may be that combination lowers costs, 
but without some such provision it does not follow 
that monopoly lowers price.'* 

The union of Labour, Capital, and the State in 
a three-sided partnership in Trade Councils would 
provide the answer to the New Statesman's doubts. 



So far I have made very Httle reference to Germany 
and to that extent I have differed from the methods 
of most of those who are preaching the need for 
alteration m our trading methods. 

The serious reader will desire to study the question 
of the permanent organisation of trade upon its 
ments alone, and will not be influenced by any 
considerations arising directly out of the feelings 
of antagonism existing between the enemy and 
ourselves. While my suggestions, if they improve 
our trading capabiHties, will, undoubtedly have the 
effect of putting us in a better position to compete 
with other nations, I do not base my demands 
upon any considerations of rivalry between our- 
selves and anyone else. I claim, that if we are to 
keep a place at all in the industrial race, we must 
improve our methods and become more efficient 
and in studying suggestions to that end it is use^ 
ful to consider what has been done in other places 
For that reason I propose to touch briefly upon 



the organisation of trade as we find it in Germany 
and elsewhere. 

I am of opinion that too much importance is 
attached to a great deal that we hear about Govern- 
ment assistance to German trade, bounties, subsidies, 
railway rates, and the Hke. It is extremely difficult 
to arrive at the facts in these matters, but the results 
of my observations lead me to think that the 
German's success in commercial matters has been 
due to a system of more or less voluntary associa- 
tions, and still more due to the fact that his trade 
is new, that he is not hampered by old traditions, 
by out-of-date methods, by small ideas, and even 
more to the fact that he has a far better imder- 
standing of the value of science and co-operation 
in trade than obtains here. 

The Germans have developed the syndicating 
and cartehsation of trading concerns to an extra- 
ordinary degree of perfection. The object of these 
organisations is very largely the elimination or 
limitation of internal competition, and such a 
systematic co-operation as will secure to the alHed 
firms advantages which are beyond their reach so 
long as each fights for its own end. This move- 
ment has now been in active progress for over 
thirty years, and the combinations or cartels take 
many forms. There are conventions fixing the 
general conditions upon which goods shall be sold, 
a loose class of association which approximates very 
closely to many of our own trade societies. But 
the most important development is the fully 




fledged syndicate or cartel which regulates pro- 
duction, prices, and sales, and leaves to the asso- 
ciated works merely the functions of producing the 
goods and dispatching them to the buyers 

These syndicates are generaUy described as the 
result of Protection, but while a protective tariff 
has undoubtedly enabled them to carry out their 
purpos^ more effectively, it is agreed by a large 
body of opinion in Germany itself that protection 
has httle to do with the formation of these cartels, 
and IS not necessary to their success. Many syndi- 
cates mdeed existed in Germany before protective 
duties were introduced at all. 

The outstanding feature of the system of German 
orgamsation is the development of central bodies 
to control sales and to allocate to each works that 
part of the production which it is best fitted to 
undertake. The result of the workings of this 
system is that German factories are kept going 
upon particular classes of work, do not each attempt 
to manufacture everything, are able to speciahse on 

pr'Surtbn^°^'^'' ^^ ^^"^ '"""^^ ^*^ '^^^P^" 
According to The Times, the Germans are still 
further developing this feature during the progress 
of the war. ^ 

"In the campaign for economy, factories and 
workshops are being standardised and specialised 
Wherfe two shops in a given area formerly produced 
mdiscnmmately two classes of goods, one factory 
has now taken over altogether one class and the 


other factory the other class. Sometimes machinery 
has been exchanged." 

We must remember that we were in business 
centuries before Germany really started. Forty 
years ago Germany had no commercial position. 
Starting at a time when manufacturing was past 
the experimental stage, Germany, like America, 
had the advantage of our experience. German 
businesses, on the average, are built upon a larger 
scale than ours. They possess from their very 
newness advantages which are denied to us. For 
this reason Germans have less need for organisa- 
tion than we have, and yet it cannot be denied that 
they possess to-day far more organisation than we 

Mr. T. M. E. Armstrong, in his Presidential 
Address to the Insurance Institute of London, 
says :— 

" Our enemies in Germany have proved them- 
selves great masters in the art of organisation. 
The unfortunate thing is that beyond organisation 
they have none of the finer virtues. We, however, 
have all the finer virtues but none of the organisa- 

So far from the German State having much to 
do with the organisation of German trade, I am 
incUned to think that the organisation of trade 
has been allowed to become an abuse, and that 
the German State may find it necessary to take 
the matter in hand and regulate it and restrict it. 
In this way we have to-day an advantage which is 



tT^t !f ^"™f y- The need for organisation is 
admitted, but the practice of it has not reached 
such a stage that the State cannot come in and 
guide, control, and encourage, without upsetting 
large vested interests. ^ ^ 

This is one of the ways in which the war has been 
of great advantage to us. It has suspended our 
ordinary operations, caused a definite break in 
our habits, and if a new system can be inaugurated 
before we return to our old ways, reforms and im- 
provements will be comparatively easy 

While the German is a creature who seems to 
like to be organised, the Englishman and the 
Amencan have not that pecuharity. The organisa- 
tion of trade in the United States also is, however, 

^^ . .f ^ ^^^' *^ j^^^^^ ^" ^ ^ore advanced 
state than here. The trade associations, of which 
there are great numbers, are taken far more seriously 
and made more use of by their members than 
similar bodies in this comitry. It is, for instance, 
quite usual for Trade Congresses to pubhsh huge 
volumes of Proceedings, showing that much more 
importance is attached to the meetings of these 
bodies than obtains on this side of the Atlantic 

The trade association proper in America would 
appear to be httle more than a trade parhament 
for the discussion of domestic problems. One 
interesting development which comes very close 
to our subject is the estaWishment of export as- 
sociations for the promotion of co-operative effort 
in foreign trade. Some of these associations have 


been remarkably successful, and many of them keep 
up expensive staffs of foreign travellers for the 
benefit of their members, collecting orders and dis- 
tributing them to suitable factories. They appear 
to thrive most in trades Hke hardware, where 
internal competition is to some extent limited. 
Each hardware house has its own brands or pat- 
terns or patents, and the foreign orders which are 
taken for these particular goods come as a matter 
of course to their makers. No question arises in 
cases like these as to the allocation of orders be- 
tween rival houses. 

But the outstanding feature of American organ- 
isations is the Trust. A Trust is not really an 
organisation at all in the sense in which we are 
now using that word. It is simply a huge single 
individual business, with one banking accoimt, 
one control, and one interest. It has no concern 
with the welfare of an industry. It has nothing 
to do with the interests of the State. It is simply 
a single unit in the commercial world, just as is 
the smallest shopkeeper. Its powers for good or 
evil are derived from its size and its consequent 

The Trust is a very natural but unfortunate 
outcome of the tendency to co-operate and work 
together among business men. It is the logical 
outcome of the voluntary trade association, and 
it will arrive in Germany and in this covmtry 
unless Governments have the sense to take the 
movement in hand in time. 



[^The abuses from^ which Trusts seem to be in- 
separable became so apparent in America as to 
necessitate the Clayton Anti-Trust Law, and 
America is now engaged in endeavouring to dis- 
solve some of these huge corporations. How far 
that endeavour is succeeding is a matter of opinion. 

I need not emphasise the dangers of the Trust. 
It is a purely selfish organisation, which is contrary 
to the interests of labour, to the interests of the 
consumer, and to the interests of the nation. It 
is designed simply in the interest of the capitahst. 

It must not be supposed that the Trust is in- 
variably a success even from its own point of view. 
The American Steel Trust, one of the biggest of 
its kind, is so hopelessly over-capitalised and has 
spent so much of its resources in a fruitless endeavour 
to control the market, that its history is a dismal 
one. In their efforts to absorb all the best manu- 
facturing plant in America, and so obtain a monopoly, 
the officials of the Steel Trust had by 1907 loaded 
that concern with five per cent, bonds to the 
amount of one himdred and twenty millions, and 
even then they did not succeed in tempting more 
than half the steel manufacturers of the United 
States, and this failure to secure full control has 
cost the Trust and the Steel Trade of America dear. 

The Clayton Anti-Trust Law has had another 
curious effect, which bears directly upon the sub- 
ject of discussion. In legislating for the abolition 
of Trusts, Congress appears to have produced a 
measure which aboUshes also trade associations. 


The Report of the Proceedings of the International 
Trade Conference, held at New York in December, 
1915, says : — 

" As a result of the passage of the Clayton Anti- 
Trust measures, we are to-day hopelessly handi- 
capped in our efforts to build up foreign markets. 
Forced to meet organised forces of production in 
foreign markets, our manufacturers are denied the 
right of co-operative effort, and are obliged to send 
individual representatives into foreign markets ; 
they are forbidden the right of an agreement on 
prices in such markets, and are actually forced to 
compete against each other, thus making the 
business unprofitable to all, to the entire satisfaction 
of foreign competitors. An arrangement for the 
pooling of expenses and the dividing of profits 
would result in a more intensive and far less 
expensive handling of a foreign market in a 
particular line. 

"It is encouraging to note that the Federal 
Trade Commission is seriously studying these prob- 
lems of organisation, and that it is giving every evi- 
dence of an earnest desire to be of real assistance 
to the manufacturing industries of this country 
in the movement to build up our foreign markets. 
We have every reason to hope that the Commission's 
investigation will lead it to recommend to Congress 
an amendment to the Trust Act permitting com- 
bination in foreign trade on a fair and equitable 

As might be expected, this alteration of the law 




to the detriment of trade associations has given 
a filhp to the association movement, and these bodies 
are stronger to-day than ever, and, curiously enough, 
are all demanding assistance from the Government 
and various rights and privileges of much the same 
kind as are asked for here. The same Report 
. says : — 

" To place us in a position where we may be able 
to compete successfully in foreign markets, there 
is needed intensive organisation of our industries for 
the elimination of waste, and the development of 
greater efficiency. To, keep down sales costs in 
foreign markets, our manufacturers must have the 
right of combination in the foreign field." 

The National Foreign Trade Council, another 
body which has been dealing with the matter, calls 
attention to the need for consolidating American 
forces for the securing, and more particularly for 
the retention, of foreign commerce. It points out 
that the revival of peace activities in Europe will 
completely alter the situation to American dis- 

" Europe's accustomed instrument for these 
activities will be co-operative effort, beginning with 
cartels and trade associations of producers, manu- 
facturers, exporters, and bankers, reinforced by 
the backing of the State, and, unless the discussions 
with which industrial Europe now vibrates shall 
fail, supplemented by economic alliances succeed- 
ing the war alliances now in force. Continuance of the 
present condition spells European industrial and 


Governmental co-operation versus American com- 
pelled competition." 

The situation in America seems to be not unlike 
the situation here. America has the same advantages 
that we have noticed in the case of Germany, of 
being much younger in trade than we are, of having 
started on a more modern basis, of operating with 
larger units, of better education, and of a greater 
national interest in trading matters. Apart from 
this, it has such doubtful advantage as comes 
from the possession of a number of trusts, and, 
in addition, it enjoys the benefits of a system 
of voluntary trade associations which secure more 
general support than is given to similar bodies 
in this country, and which are at present engaged 
in demanding from the American Government 
rights and privileges such as those which I suggest 
ought to be given to our own trade associations. 

It will thus be seen that the tendency of trade 
all over the world is towards association. Manu- 
facturers everywhere have come to realise that 
they must combine. This universal conclusion 
is fraught with grave dangers, as is shown by the 
experiences of Germany and America, as well as 
by the minor experiences that we have already 
had in this country. 

Unrestricted co-operation among producers must 
lead to price rings or trusts. Further, it must 
lead to a widening of the gap between capital and 
labour. It is none the less necessary, because only 
by combination can production be raised to a point 




that will meet the needs of humanity. We are 
therefore doomed here, as everywhere else, to a great 
development of trade combination. 

We are, however, in the fortunate position that 
that development has not yet reached the stage 
where it has become unmanageable or dangerous, 
and there is still the opportunity for statesmen to 
step in and use these proved tendencies for the 
nation's good. That opportunity has always ex- 
isted to a certain extent, but to-day, when, as Mr. 
Lloyd George has put it, " the whole state of society 
is more or less molten, and you can stamp upon 
that molten mass almost anything, so long as you 
do so with firmness and determination," there is 
a chance that will never return for statesmanship, 
and for the establishment of an ideal system of 
co-operation, in which not only manufacturers but 
labour and the State are combined for the good 
of all. That opportunity will last only so long as 
present conditions continue, and will pass very 
rapidly when peace is restored. 



The advocates of the appointment of a Minister 
of Commerce frequently make the error of abusing 
the Board of Trade. Destructive criticism is so 
easy, and looks so well in print, that many of the 
supporters of a Ministry of Commerce are tempted 
to make out a case against the Board of Trade, 
chiefly through lack of ability to set up a sufficiently 
good case of their own. It seems to be assumed 
that the appointment of a Minister of Commerce 
would upset the Board of Trade or be opposed 
by that Department or constitute a reflection 
upon its activities. 

This is, however, a very short-sighted and in- 
adequate view of the situation. There is ample 
precedent for two or three Government Depart- 
ments working within the same sphere and yet in 
no essential way overlapping. The Local Govern- 
ment Board, the Board of Education, and the 
Home Office, are all engaged in looking after local 
authorities. The first two, in particular, work 
through the same bodies ; the County Council is the 
medium for the operations of the Board of Educa- 





tion, while being also under the control of the Local 
Government Board. The Home Office, in many 
of its departments, covers the activities of local 
authorities. For the purposes of war we have 
three distinct Departments: the Admiralty, the 
War Office, and the Ministry of Munitions, while 
m the case of the Board of Trade itself a separate 
Ministry has now been set up to deal with the 
problems of Labour. 

A well-constituted Company takes care that its 
Board of Directors consists of carefully chosen 
persons with different interests and functions. 
Every Board, to be really successful, should have 
on it a " pusher " and a " brake." A commercial 
concern which does not possess a man whose sole 
interest is to promote production or increase turn- 
over, is doomed to failure ; but unless that Board 
also possesses a person who will act as brake and 
will modify and control some of the schemes of 
the pusher, disaster is also assured. This 
illustration seems to cover the case of the Govern- 
ment in its relation to the trade of the country. It 
has a brake, indeed some people think a far too 
powerful brake, in the Board of Trade; but it 
has never had, and this is what it must have in the 
future, a pusher, a development officer, an improve- 
ment minister, such as the Minister of Commerce 
of the future will have to be. 

The President of the Board of Trade is responsible 
for the enforcement of Acts of Parhament restrict- 
ing and regulating the operations of trade, commerce, 



and industry. That is a necessary function which 
must be maintained in the future. The only mistake 
that the Board of Trade has made, and it is coming 
to be recognised as a mistake, is that it has endeav- 
oured to introduce among its legitimate functions 
a few half-hearted attempts to further the interests 
of industry. In the Commercial Intelligence Branch 
and the Exhibitions Branch, two absurdly small 
departments, it has attempted the work of pro- 
moting trade. 

The rimes Trade Supplement, October, 1916, gave 
a most useful list of some of the principal activities 
of the Board of Trade. That list is reprinted here 
because its mere recitation is quite sufficient to 
establish beyond question the case for a separate 
Ministry to undertake the work of promoting trade. 
The duties set out in this long catalogue will be f oimd 
upon examination to be the regulation and restric- 
tion of traders' activities, and in only one or two 
respects can they have any sort of relation to such 
questions as output, turnover, export, education, 
elimination of waste, improved methods, and all 
the other great problems that are awaiting the atten- 
tion of the Minister of Commerce. 




^ — Harbours. 
I — Lighthouses. 

— Pilotage. 

— Foreshores. 

— Port of London. 
^ — ^Navigable Channels, Ports, etc. 

— Interference with Tidal Water. 

— Local Charges on Shipping. 

— Wrecks : Salvage, etc. 

— Loans to Harbour Authorities. 

— Danube Navigation. 





Orders and 

O^J Administra- 

§ 1 tion. 

S ^Sub. Dept. 









-Piers and Harbours. 
— Pilotage. 

-Electric Lighting. 

-Gas and Water Cos. 
— Gas Returns. 
—Metropolitan Gas Cos. 
—Sanitary Conventions. 
— Quarantine. 

—Electrical Standards Laboratory. 
— Wreck Inquiries. 

— Colonial Inquiries. 
—Deaths on Board Ship. 
-Boiler Explosions. 

— Instructions. 
— ^.Jurisdiction. 
"j — Conventions. 
— Fees. 

—International Questions. 

— Depositions. 
—Wreck Statistics. 
—Instructions to Receivers. 
—Rewards for Life Saving 
V —Rocket Apparatus. 


Colonial Acts ( —^^Sistry of Ships. 

and J —JJeasurement of Tonnage. 





1 —Passenger Steam Ships. 
( —Emigrant Ships. 
I —Cattle Ships. 

/ — Load Line. 

— Crew Spaces. 

— Deck Cargoes. 
J — Grain Cargoes. 

— Dangerous Goods. 

—Ships' Lights. 
V — Lile Saving Appliances. 

— Surveyors. 

f —Engagement of Seamen 
—Discharge of Seamen. 
— Crimping. 

— Transmission Scheme. 
—Health of Crews. 
— Apprentices. 
— Lascars. 
— Sailors' Homes. 














Sub Dept. 
Office of the 
Gen, of Ship- 
ping and 


' — Distressed Seamen Abroad. 
— Hospitals Abroad. 
— Crimes at Sea. 

— Examination of Masters, Mates, and Engineers. 
— Examination of Skippers and Second Hands of 

Fishing Boats. 
— Fishery Conventions. 
— Naval Reserve. 
— Local Marine Boards. 
— Mercantile Marine Offices. 
— Instructions to Superintendents. 
— Instructions to Colonial Offices. 
—Rule of the Road. 
— Signals. 

— Merchant Shipping Legislation. 
— Registry of Ships. 
— Liability of Shipowners. 
— ^Average. 
— Merchant Shipping (Fishing Boats) Acts. 

— Registration of Ships. 
— Issue of Certificates to Officers. 
— Custody of Official Logs, etc. 
— Quinquennial Census of Seamen. 
— Information whereabouts of Seamen. 
' — Royal Naval Reserve. 

/ — Railways. 

— Canals. 

— ^Tramways. 
. — Provisional Orders : Tramways. 
H — Railway Returns. 

— Canal Returns. 

— ^Tramway Returns. 

— Light Railways. 
^ — Explosives Act, 1875. 

— By-laws of Railway Cos. 



Sub Depts. ] 

— Standard Weights and Measures. 
— London Traffic Branch. 


Sub Dept. 

/ — Companies. 
— Limited Partnerships. 
— Life Assiurance. 
— Employers' Liability Insurance. 
— Fire Insurance. 

— Accident and Sickness Insurance. 
— Bond Investment Insvurance. 
— Art Unions. 

— Registration of Newspaper Proprietors. 
— Moneylenders' Exemptions. 

— Companies (Winding-up). 













/ —Commercial Questions Generally. 
/ —Commercial Treaties. 

-FnrpIS; ?"f r ?^^f^^^ ^^^^ ^ugar Convention. 
— i^oreign and Colonial Tariffs. 

Tobm^f"^^ ^""^ Foreign Countries and 
— Special Tariff Returns. 
—Statistics, Trade and other. 
—Commercial Intelligence. 
— Statistical 

Abstracts for— United Kingdom. 
— Colonies. 
— Foreign Countries. 
^. , ^ — British Empire. 

—Digest of Colonial Statistics. 
—Railway Statistics and Report. 
— Cotton Statistics. 
—Shipping and Navigation (monthly accounts 

and annual statement). 
—Supervision of Monthlv Trade Accounts and 

Annual Statement of Trade 
—Translating for all Departments. 
— Board of Trade Journal. 

—Trade of Foreign Countries (monthly accounts), 
— Commercial Missions. 
—Commercial Representations in Dominions 
— Dissemmation of Commercial Infonnation 
—Commercial Editing of Consular Reports. 
— Indexmg of Consular Reports on Trade 
—Patents, Designs, and Trade Marks. 
— Merchandise Marks. 
— International Exhibitions. 

Sub Depts. J — Commercial Intelligence Branch, 
t, • — Exhibitions Branch. 

— Labour Questions generally. 
/ — Labour Gazette. 

— Census of Production. 

— Labour and Production Statistics. 

—Immigration and Emigration Statistics, etc. 

— Statistical Monographs. 

— Wages Statistics and Reports. 
/ — Prices Statistics. 
Labour Dept. ^ —Trade Union Statistics and Reports. 
* — Strike Statistics and Reports. 

— Abstract of Labour Statistics. 

— Abstract of Foreign Labour Statistics. 

— Co-operation Statistics. 

— Labour Exchanges. 

— Unemployment Insurance. 

— Trade Boards. 

— Cost of Living. 



»< -fl 


Sub Depts. 









{ — Census of Production Branch. 
— Labour Exchanges and Unemployment In- 
surance Branch. 
— ^Trade Boards Branch. 

— Estimates for the Votes. 

— Estimates and Accts. of Lighthouses Abroad* 

Lighthouse Bds., Harbours, etc., the Vote 

for Mercantile Services. 
— Accounts of Trade Boards and of Exhibitions 

— Accounts of Consuls and Colonial Shipping 

— Wages and Effects of Deceased Seamen. 
— Wages of Seamen left behind Abroad. 
— ^Seamen's Money Orders and Savings Banks. 
— Seamen's Temporary Deposit Banks. 
— Pensions — Merchant Seamen's Fund. 
— Greenwich Hospital Fund. 
— Lighthouse Service. 
— Wrecks and Salvage Accounts. 
— ^Accoimts of Transmission of Seamen's Wages. 
— Expenses of Surveyors and Recovery of Fees 

from Owners. 
— Expenses of Inquiries and Prosecutions. 
— Expenses of Relief of Distressed Seamen 

Abroad and Recovery from Owners. 
— Bankruptcy Estates Accoimt. 
— Companies Liquidation Account. 
\ — Light Dues on Shipping. 
— Lighthouse Stores. 

In addition there are the chief Industrial Commissioner's Department 
concerned with Labour Disputes, the Bankruptcy Department, the 
Solicitors' Department, the Establishment Department, and the 
Patents, Designs and Trade Marks Office. 

The case for a Ministry of Industry and Commerce, if 
properly constituted and built upon a basis of representative 
Trade Councils, was a strong one before the war. It is 
to-day unanswerable. The problem arising from the 
transition from war to peace, the transition from State 
control under e^nergency legislation to less restricted 
conditions, are so complicated and present such novel 
aspects that no existing Government Department is capable 
of solving them, and when these are all settled, the further 
problems of promoting and increasing our trade to keep 
pace with the efforts of competitors and the general pro- 
gress of the world, will more than justify the establishment 
of such a Ministry. 






The foundation of industrial prosperity is produc- 
tion. The material well being of a nation demands : 
First, the attainment of the possible maximum, 
both as regards size and quahty of output, 
whether of goods or services. 
Secondly, the elimination of all waste of material 

or effort in the process of production. 
Thirdly, an equitable division of the proceeds of 
industry, enabling all those concerned in the 
creation of wealth to obtain a reasonable 
share of its material benefits. 
My contention is that we shall never reach the 
possible maximum in output until we have exhausted 
every device of organisation. 

This question of output is already an extremely 
urgent one, and in the future will assume far greater 
importance. Our position in relation to our com- 
petitors had become serious even before the war. 
Figures which have been prepared by Mr. Charles 
Lancaster are typical of many that could be given 
to show the necessity for a radical alteration in 


our point of view on this vital matter of output. 
Labour and Capital are equally at fault, and both 
will suffer unless great changes are made. 

The following is a Report prepared for the Liver- 
pool Chamber of Commerce by Mr. Lancaster : — 

'* Whatever arrangements are made for conduct 
of British trade after the war, one thing is absolutely 
certain, and that is that the output of manufacturers 
of all kinds in this country will have to be increased 
to an extent undreamed of by our manufacturers 
and trade unionists. The chief competitor of the 
United Kingdom in the future will not be Germany, 
but the United States of America. Few will doubt 
this who have devoted any attention to the matter 
of the manufacturing efficiency of the two countries. 

" I will illustrate by quoting from the first Census 
of Production in this country published by our 
Board of Trade relating to the year 1907, and con- 
trast a few points with the American Census of 
Production for 1909. I cite five important indus- 
tries in each country — viz., boots and shoes, card- 
board boxes, butter and cheese, cement, and the 
clothing industry. To compare the relative effi- 
ciency of the two countries let us compare the horse- 
power used for 1,000 men and also compare the 
value of the product per wage-earner. Such a 
comparison reveals the fact that per 1,000 wage- 
earners the British boot and shoe industry employed 
172 horse-powers only, and the United States 486 
horse-powers. In making cardboard boxes here 
we employed 114 horse-powers per 1,000 workers. 




and the United States 590 horse-powers per 1,000 
workers. In butter and cheese we employed 1-477 
horse-powers per 1,000 workers, and the United 
States employed 5507 horse-powers per 1,000 
workers. Cement here employed 3-195 horse-powers 
per 1,000 workers, and the United States 13-875 
horse-powers. Clothing industries here used 45 horse- 
powers per 1,000 workers against 165 horse-powers in 
America. In these five industries the horse-power 
was from three to four times as great in the United 
States as in the United Kingdom. The plain 
meaning of this is that every American worker 
turns out from three to four times as much as his 
British competitor. 

" Then if we compare the value of production per 
man in each country we find the output of 1,000 
men confirmed as to the value of that output. 
The value produced in the United Kingdom by 
each worker in the boot and shoe industry per year 
was £171. In America £516. In cardboard boxes 
£106 here and £275 in America. In butter and 
cheese here £1,310 and £2,979 in America. In 
cement £192 per year and £472 in America. In 
clothmg mdustries £158 and £484 in America. 

" The five industries named are typical of nume- 
rous others. In most comparable cases we find that 
machinery per 1,000 workers is about three times 
as powerful in America as it is here, and that output 
per worker is about three times as great. 

" British industrial output can be doubled and 
trebled, but neither capitalists or workers have yet 



tackled this increased production by employing 
labour-saving machinery. Indeed the efforts of too 
many British workmen and their leaders have been 
directed to limiting production absolutely regard- 
less of the natural economic law that the greater 
the number of units of production the smaller is 
the cost per unit, because the fixed charges, necessary 
to incur whether output be small or large, are spread 
over a greater number of units produced, thus reduc- 
ing the cost of each unit. In America the greater 
production per man leads to greater consumption 
per man, that is, to his prosperity. 

" Now I do not propose to dwell on this phase. 
I only say that the inaptitude and ignorance of 
many manufacturers and their workmen here are 
directly accountable for the lack of efficiency we 
as a manufacturing nation display in many direc- 

" We are as unprepared for the commercial war, 
which will follow the close of the mihtary war, as 
we were for the military war itself. In the latter, 
a miracle has been worked — and millions of men and 
thousands of millions of money have been raised. 

" But we cannot expect a similar miracle to be 
worked in the manufacturing industries upon which 
the life of a nation — that is, its export trade — 
depends. Much ground will have to be broken, 
and much missionary work undertaken, before any 
progress can be expected, even in preparing for 
fuller discussion, but it is not too soon to enlist 
earnest thought — with a view to action later on." 


Dr. Dugald Clerk, in the Annual Address to the 
Royal Society of Arts, puts the same point in 
another way : — 

" It is a remarkable fact that the United States 
of America, with its loo millions of population, 
is adequately served as to its industrial needs by 
835 millions of workers, while we require 824 
millions to supply the needs of 437 millions." 

Mr. Charles Lancaster has made another valuable 
contribution to the same discussion in an article 
in The Times Trade Supplefnent of January, 1917, 
where he deals with the output of coal and shows 
how the tendency of the United Kingdom has been 
steadily downward, while that in other parts of 
the world has been to increase. 

" During the twenty-five years ending 1912, the 
number of tons of coal produced per annum per 
person employed in the industry in the United King- 
dom fell every year from 312 tons in 1887 to 244 
tons in 1912. In the United States it increased 
every year from 400 tons in 1887 to 660 tons in 1912. 
In AustraHa it increased from 333 tons to 542 tons, 
in New Zealand from 359 tons to 503 tons, and in 
Canada from 341 tons to 472 tons. In other words, 
the number of tons of coal produced per coal worker 
per annum is nearly twice as large in Australia, 
New Zealand, and Canada as it is in the United 
Kingdom, and nearly three times as much in the 
United States of America as in the United Kingdom. 

" No doubt the coal seams in America lie nearer 



the surface and are of larger dimensions. Also 
the ' adits ' allowing rail haulage up hill to the pit- 
mouth largely replace the deep shafts in our own 
country. But, after making full aUowance for 
these things, the British miner has a good deal to 
account for. A study of the coal tables of 1912 
will demonstrate the ominous reduction per man of 
coal-getting and the increase in price per ton at the 
pit-mouth in the United Kingdom from 45. lod in 
1886 to gs. ofi. per ton in 1912. Also the decrease 
in pnce in the United States of America from 6s Aid 
per ton at the pit-mouth to 6s. id., and the decrease 
in Austraha from 9s. 2d. to 7s. 6\d. In New Zealand 
the pnce remained in 1912 about the same as in 
1887, VIZ., los. lod. per ton, although wages have 
been periodically increased in all countries men- 

This is not a matter of tariffs ; it is not a matter 
of wages or profits : it is solely and simply a question 
of orgamsation and the " will-to-produce." 

But in securing maximum output it is not only 
essential to employ the best machines, and to see 
that the energies of every worker are utilised to 
the best advantage. It is also necessary to see that 
every factory in an industry is employed upon the 
particular class of work which it can best perform. 

This point can be iUustrated from practical experi- 
ence by taking any industry and examining closely 
Its methods of procedure. The furniture trade as at 
present carried on in this country will serve our 





purpose. This trade is useful as an illustration 
because something has already been done along 
lines which must be followed a great deal farther 
before the maximum output is reached. 

Many years ago English furniture was almost 
entirely made by small " garret masters," who sold 
their wares to wholesale merchant houses. The 
extravagance of making each piece of furniture 
separately and by hand began to be realised about 
thirty years ago, and since then great factories have 
sprung up in different parts of the kingdom, and 
machine-made furniture has largely taken the place 
of the hand-made goods with which our fathers were 
content. The result has, of course, been greatly 
to cheapen furniture generally, and to raise the 
standard of comfort in the homes of the people to a 
point that would have been considered unthinkable 
a quarter of a century ago. 

But even with this tremendous advance the possi- 
biHties of improvement have not been explored to 
anything like the maximum extent. An inspection 
of the catalogues of the leading furniture manu- 
facturers would show that each of them is attempt- 
ing to make almost every class of furniture. The 
aim in each case is to put on the market a complete 
range of goods which shall include everything that 
is required for the furnishing of the cottage or the 

Turning for a moment to America, the fashion 
there is found to be entirely different. Huge 
factories at Grand Rapids and elsewhere confine 



the whole of their energies and attention to one line 
—chairs, desks, or carcase work. It is extremely rare 
to find a desk firm touching upholstery. The 
American does not aim at covering the whole of his 
trade. His ambition takes a different form and is 
summed up in the one word " carload." 

If it were possible to reorganise the EngHsh furni- 
ture trade, and to divide up the different articles 
made between the different firms engaged, so that 
the whole of the energies of one big factory could 
be devoted to one class of work, the result must 
be greatly to increase output and to minimise cost. 
; But this does not by any means exhaust the 
catalogue of advantages that would accrue from 
such an arrangement. Another result that would 
constitute an enormous saving would take the form 
of a reduction of stocks. In the ordinary way all 
these furniture houses hold big stocks of hundreds 
of different articles. Thus it comes about that some 
common pattern of cheap bedroom chair will be 
in stock at fifty different places, and a vast amount 
of capital locked up in that one line. 

Another result of the ideal arrangement which 
we are here debating would be a great reduction in 
the amount of machinery employed for a given out- 
put. The present method involves the employment 
of expensive machinery on short runs and the waste 
of much valuable time in altering and adjusting 
that machinery to the next j ob. If the wood- working 
plant of the country could be kept going in the same 
way that the shell-making plant is now employed, 




and each machine be continually occupied with 
one process, the saving in machine time and expense 
would represent a very substantial difference in the 
price of the finished article. 

For these and similar reasons the capital employed 
for a given output in furniture is a great deal more 
than is necessary. The locking up of money in this 
way may partly explain why the British manufacturer 
finds it difficult to extend that credit to foreign 
buyers which is stated to be given with such readi- 
ness by German traders. 

If we could imagine the Enghsh furniture trade 
cartelised as it would be in Germany, there would be 
formed a central seUing organisation which would 
cover the whole world much more efficiently and 
with considerably fewer persons than is done by 
the present individuahstic and competitive method. 
That selling organisation would collect all the orders 
and allocate them to different works according to 
their capacity. The works would then be classified 
for special operations and every article would be 
produced with the maximum of economy. 

It is, of course, not suggested here that we should 
adopt the German cartel as our model, but it is 
suggested that a Trade Coimcil, possessing certain 
statutory powers and embodying the whole trade, 
would be able to exercise a very considerable 
influence in the direction of the economies outhned 

The orthodox answer to any such suggestion as 
this is found in the two words " Competition " 



and ' ' Consumer. " It is argued that unless you allow 
absolutely free play to competition you place the 
consumer at the mercy of the producer. If it is 
true that there is no way of bringing about these 
reforms except through a trust or cartel, then I 
should be inchned to agree, but if it is possible to 
set up a system of State-controUed associations which 
while ehminating waste shall maintain the best 
features of the individuahstic plan, then I think this 
argument falls to the ground. 

There is a branch of study which economists seem 
to me to have neglected, and which I should Hke 
to see further explored. It is to discover the line 
beyond which competition ceases to be an influence 
for economy and becomes an expense. It is obvious 
that we have developed the competitive system to 
the point where it adds very greatly to the cost of 
most of the articles that we produce. That being 
so, it is idle to talk of competition as a protection 
for the consumer. 

The managing director of one of the largest iron 
foundries in the country, discussing this subject with 
me recently, put the possibihties of output higher 
than I should have ventured to go. His company is 
engaged in the production of probably a thousand 
different articles, a range of fines necessary to the 
company to keep its place under our present system 
of competition. This expert assured me that if 
his foundry could be employed exclusively upon the 
production of rain-water pipes, he had the facihties, 
the labour, and the room to turn out twice the 


present total production of the United Kingdom. 
If the matter could be carried one stage further, 
and it could be arranged that these works were con- 
fined to the production of one size of one pattern 
of rain-water pipes, I was assured that it could 
produce five times the total output of the country 
under the present system. Such a scheme as this 
would amoimt to the appHcation of the munition 
method to every trade ; the sub-division of goods 
and the sub-division of operations, the classifying 
of works and the allocation to each of that part of 
the product which it was best fitted to produce. 

" The day of conservative and scattered individual 
effort is over— it leads to certain ruin," says the 
Daily Telegraph, " Success Hes only in concentra- 
tion by collective effort and the pooling of individual 
interests for the common good. The industrial 
problems of the future must be faced, and faced 
quickly— moreover, they must be solved, and solved 
quickly. The onus of responsibility falls primarily 
on capital, in the provision of standardised organisa- 
tion, direction, and equipment, whereby the best is 
accurately determined and the best is progressively 
maintained : thereafter capital and labour must co- 
operate in standardising rapid production, so that 
good general trade may be promoted by steady 
employment at high wages to the lasting benefit 
of the industries concerned and the general welfare 
of the entire community." 

It is perfectly obvious that if we are to hold our 
position as leaders in the commercial world we must 



find some system of co-operation between producers 
so that overlapping of effort may be prevented, 
internal competition ehminated, and, by the careful 
allocation of production among works in accordance 
with their experience and plant capacity, effective 
competition made possible in foreign markets."'^ r: 

If only we could reach the point where we could 
begin the study of each trade as a whole as a national 
asset, regarding its work as a national interest, 
and we could contrive to get both labour and capital 
to devote themselves to this study, I feel sure that 
a great deal could be done towards the increase of 
our output, which would, of course, mean the capture 
of foreign markets, the reduction of price, and more 
commodities for everybody, more real wealth, which 
is exactly the same thing as either an increase in wages 
or an increase in profits, and ought to bring both. 

In the past, so far from studying the possibilities 
of increasing output, the tendency has been deUber- 
ately to restrict output. We have heard a great 
deal in the last few years about the limitation of 
output on the part of the trade unions. The iniqui- 
ties of the system known as " csl' canny " are, in 
my mind, no worse than the iniquities of the stupid 
competitive system which forces every manufacturer 
to attempt to cover the whole of his trade and thus 
waste half of his energies. 

To give effect to the undoubted need for a great 
increase m the output of our industries, the willing 
consent of both capital and labour is essential, but 
something more than consent will be wanted if 


anything practical is to be done. The problem 
requires to be studied by the organisations of both 
parties to industry, and both will have to assume 
responsibiUties with regard to it. First of all 
the employer will have to demonstrate beyond any 
question of doubt that he is capable of finding a 
satisfactory market for the increased output if 
labour consents to do its part. The restriction of 
output on the part of trade unions has been and is 
justified by the fear, often well founded, that no 
proper organisation existed to prevent gluts and 
consequent unemployment. 

It would, therefore, seem that the first essential 
is the estabUshment by manufacturers of adequate 
selling arrangements abroad, and this can only 
be done upon a co-operative basis. Employers 
generally, are fully alive to this side of the problem' 
and the only means at present open to them of over- 
coming its difficulties is to combine in the form of a 
trust. Voluntary associations are quite helpless in 
the matter, and this part of the case provides the 
strongest argument for State action in the setting 
up of Trade Councils with power to tackle the 
problems of export on behalf of the whole trade. 

From the man's point of view there are two or 
three considerations which will weigh with him 
when he is asked to forego the system of " ca' canny," 
which has been so laboriously and carefuUy built 
up in this country. It should, I think, be more 
generally known that this system is peculiar to 
Great Bntain, and if an appeal were made to the 



patriotism of the working classes and it were shown 
that their prosperity depended upon competition 
with great industrial countries where no such scheme 
was in operation, a different point of view with 
regard to it might prevail. 

Some readers may remember the great strike in 
the building trades in Chicago, which was one of 
the worst that America has experienced in recent 
years. The basis of this strike was a demand on 
the part of the workers for the right to enforce restric- 
tion of output. It did not succeed, but it did great 
damage to the trade of Chicago. As a result of it, 
the United States Government appointed the late 
Carroll D. Wright, who was at that time Commis- 
sioner of Labour, to undertake an investigation as 
to the extent to which restriction of output was in 
force throughout the world. Mr. Wright reported, 
after the most exhaustive inquiries, that restriction 
of output or what was known as the " ca' canny " 
poHcy had obtained but shght foothold in America, 
or, in fact, in any other country except in England. 
England was the place where the idea had originated 
and the only place where it was in full effect in 
many important trades. 

The report of the investigators of the United 
States at this time is worth study by those who are 
interested in this problem. 

The next consideration that should be impressed 
upon labour is the undoubted fact that, all over 
the world, wages are highest where there is the 
greatest amount of power and machinery in use, 





and where output is at its maximum. The lowest 
wages in the world are paid in China. The Chinese 
are a people of an industrious, clever, and intelligent 
type, yet they work entirely by hand for a wage 
which is represented by onlyTa few pence a day. 
The highest wages in the worid are paid in America, 
where more machinery is used per worker than in 
any other country. 

When labour has been assured that unlimited 
production is free from the old risks of gluts and 
unemployment, and when it has been proved that 
high production and the latest machinery mean 
high wages, something else will still be necessary 
before it will consent to forego what it regards as 
its privileges in these matters. Labour will not 
accept these conclusions from capital or from any 
other authority. It must find these facts out for 
itself. It must be satisfied that this is not some 
capitaHstic scheme with the sole object of increasing 
profits. It must be satisfied that increased output 
is really in the interests of humanity and civiH- 
sation, and in the interests of its own class. That 
satisfaction can only come from a larger participation 
on the part of labour in the problems of industry. 
If labour were given an equal place with capital 
on Trade Councils, and made to share the responsi- 
bilities for the welfare of each of our national indus- 
tries, it would come to see that wages and profits 
are really only minor parts of the problem, and all 
the economic follies of the pre-war labour policy 
would die a natural death. 



The two great questions of Education and the 
Application of Science to Industry will never be 
satisfactorily settled until trade is organised. We 
spend on both subjects a great deal of money, but 
we fail to get value for our money because, true to 
our traditions and characteristics, we persist in 
performing this work in scattered and spasmodic 
efforts without any real plan. The result is a great 
deal of overlapping and waste. 

When we have succeeded in getting our industries 
organised, and when we have a Tirade Council or 
some similar authority to study, promote, and control 
each industry, those Councils will, of course, turn 
their attention to the subject of Education. 
f\ From the trade point of view there are several 
rough divisions into which education can be classi- 
fied. The relation between trade and elementary 
education is not very apparent, and it is not easy to 
see what influence a Trade Council could have upon 
the conduct of elementary schools. It is neverthe- 
less the fact that the great majority of the children 



who attend these schools are destined for some 
form of industrial activity, and there is a very great 
deal that could be done in the elementary stages to 
interest the child in these matters. 

There is, of course, no suggestion here that elemen- 
tary education should be specialised or that children 
should be taught trades. But a great deal could 
be done, and ought to be done, to direct the infant 
mind to a proper view of industry. The boy of ten 
sets before himself a model of a man, and aU too 
frequently that model takes the form of a pohce- 
man, or a sailor, or a Dick Turpin, or some modem 
cinema hero, and it never dawns upon him that 
there is any romance, any dignity, or any real 
interest in other forms of manly activity. With 
my own boys I have made it a regular practice, one 
day in each holidays, to visit some factory and allow 
them to investigate manufacturing machinery and 
processes in their own way. 

When we come to the secondary and technical 
schools, the interest of industry becomes more 
obvious. It is an admitted blunder that we are 
spending great sums of money in this branch of 
education on the strength of the opinions of educa- 
tionists, without any regard, or with hardly any 
regard, to the views of the trades concerned. The 
lack of a hnk between a trade and its trade school is 
felt very keenly by those who are responsible for 
the latter, but they are quite helpless in the matter 
so long as trade remains in its present chaotic condi- 
tion. When a skilled trader does go out of his way 



to take an interest in a trade school he always finds 
himself heartily welcomed by the authorities and 
the instructors, but occasional outbursts of individual 
interest cannot compensate for the lack of any 
official concern on the part of a trade for the edu- 
cation of the students who have elected to follow 
that trade as a career. 

One is often struck with the fact that the boy of 
thirteen or fourteen becomes bored with school and 
determines to get out into the world and earn his 
Hving. This is not entirely a matter of pounds, 
shillings, and pence, although the prospect of wages 
has undoubtedly something to do with it. The boy 
will generally tell you that he is fed up with schooling 
and wants to get into a more serious world. It has 
never dawned upon him that there is any connection 
between his education and his later work : for the 
present system has failed to link up academic 
theories with their practical application. The lad 
does not understand the meaning of that which 
he has to study. A proper system of co-operation 
between industry and education would find a way of 
altering his point of view. 

It is fortunately imnecessary to debate at any 
length the need for improvement in our educational 
system, because there is no doubt that great improve- 
ments will be made. The only point that need 
occupy us here is that those improvements will be 
far more effective, far more practical, and have a 
much better chance of success, if they are made with 
the advice and assistance of those who are engaged 




in the practical side of industry. The Trade 
Council in each trade would be able to exercise an 
enormous influence for good in this matter. 

The subject of education, however, as it concerns 
the welfare of an industry is not exhausted when 
proper arrangements have been made for the young 
The Trade Council would have an even more difficult 
problem to tackle in connection with the education 
of those actually engaged in its trade. Development 
along these lines would involve the constant diffusion 
of knowledge as to trade customs and practices in 
other countries, apart altogether from much neces- 
sary work m educating both employers and employed 
m the pnnciples of industrial economics, and the 
aims and aspirations of the industry in which they 
were engaged. ^ 

Next, the public has to be educated. A healthy 
trade, developed to its fullest extent, is impossible 
without a sympathetic pubUc opinion behind it 
This is a branch of work that has never been studied 
in the past, and cannot be studied so long as a trade 
is composed merely of disconnected individuals. 

The possibihties of education will expand indefi- 
nitely when labour begins to take an interest in 
them, and if ever the ideal is reached, we shall all 
be engaged in educating ourselves and one another 
throughout our careers. Maximum output, elimina- 
tion of waste, the perfection of the product, and all 
the ideals which we should keep constantly before 
us, are not to be attained without the true educa- 
tional spirit. 



Labour from the lowest to the highest grades 
always requires more education. An examination 
of the present position, a walk through any factory, 
will show this to be so. A mechanic will be found 
reading drawings, and managing somehow to do his 
work from the rough and ready knowledge of draw- 
ings that he has picked up in the course of his 
apprenticeship. That mechanic would read those 
drawings with far more interest, and his work would 
be better, if he had had an opportunity of going 
through a course of draughtsmanship. An operator 
will be found working a lathe, and by the rule, the 
reason for which is quite unknown to him, he will 
have his cutting tool clamped near to the cutting 
edge. If he had been given the opportunity of 
studying the elementary principles of mechanics, 
and had learned the rule of the lever, the reason 
for the particular way in which he has to adjust 
his machine would be obvious to him, and his work, 
instead of being drudgery, would be a matter of 
scientific interest. An engineering draughtsman, who 
now drags out a weary existence with a pen and ruler 
and tracing paper, would stand a better chance of 
advancement, and his drawings would be improved, 
if he had been able, during the period of his educa- 
tion, to see something of the practical side of the 
work that he was doomed to draw for the rest of his 
life. The shop manager has probably been selected 
because of his abiUty in the management of men, 
an ability which is natural to him and which has 
not been acquired at any school. That manager 


. il 



,1 ■ 




would manage far better if he had a greater know- 
ledge of the scientific side of the work that came 
under his control. 

In short, the linking up of the educationist and 
the trader and the joint control by them of industrial 
education would result in an alteration in the point 
of view of most of the people engaged in industry 
and add very materiaUy to their interest in the work 
m which they were engaged. Labour unrest would 
not be so prevalent if every labourer had the educa- 
tion which would enable him to see the true purpose 
of the work he was doing, instead of regarding him- 
self.^as he frequently does at the moment, as a sort 
of automatic machine in which nobody has anv 
interest. ^ 

The improvement of our industrial education 
does not necessarily mean a great addition to our 
expenses. There will, of course, always be a demand 
for more money for education, and it is right that 
It should be so, but if we were content to spend only 
the same amount of money and were to bring our 
arrangements a httle more into hne with practical 
reqmrements, great improvements would result 
.^:^A few examples will make this point clear There 
are thirty-eight schools which were recognised by 
the Board of Education in 1908 for the teaching of 
cotton spinning. There were at the same time some 
dozens of trade organisations, societies, and unions 
mteresting themselves in cotton spinning, and yet 
inqmry shows that these trade organisations do 
not appear to take any action as regards the educa- 


tional training of persons engaged in the industry. 
In cotton weaving there are thirty-five schools, 
and the same remark applies. In engineering the 
case is even worse. The Board of Education has 
approved or authorised over eighty schools where 
engineering is taught, and to these must be added a 
great number of institutions which do not seek the 
assistance of the Board. In engineering there are 
probably twenty Trade Unions and a large number of 
Employers' Associations and Federations, and yet 
it has to be admitted that no trade organisation has 
pursued any vigorous action relating to educational 
training. Instances are to be found where local 
education authorities have invited engineering asso- 
ciations or trade unions to nominate one or more of 
their members to represent them on advisory com- 
mittees, but this is not the result of any system, and 
is the full extent to which co-operation between the 
trade and education has gone. 

As an example of the ramifications of the Board 
of Education in technical training, it may be men- 
tioned that there are no less than twenty-one schools 
which receive its assistance for the education of 
boys who are going into the fishing industry, thus 
showing that there is no lack of desire on the part 
of the State to spend money in trade education, 
even though traders themselves take no interest 
in the matter. 

There are thirty schools teaching wool and worsted 
spinning and .weaving ; sixty-eight schools where 
coal-mining is taught ; thirty-three give instruction 



in shipbuilding ; 122 are available to the boy who 
desires to become a printer ; while even trades like 
milhnery and upholstery can boast fifty-five and 
twenty-five schools respectively. 

Electrical engineering very naturally heads the 
list of technical schools, with a total of 169, the 
reason being that there is no industry in which the 
necessary proportion of skilled to unskilled workers 
IS so high. The lowest grades of operatives in 
electrical work must of necessity have some know- 
ledge of the principles of electricity. A close 
examination of these schools discloses a much 
greater amount of interest on the part of the 
individual members of the industry in the training 
^ven, but very little organised connection between 
the trade and training seems to exist. 

Turning to the subject of Scientific Research, 
there is here enormous scope for the activities of 
the Trade Councils. The progress of any industry 
depends upon the continual introduction of new 
knowledge. This is a fundamental principle which 
the Bntish manufacturer has always failed to grasp 
The neglect of science by British industry in the 
past IS the chief reason for the loss of many valuable 
trades to more progressive countries. 

The individual manufacturer is, as a rule, obliged 
to keep a very tight grip on the purse-strings It 
IS very few individual concerns which can afford 


to spend large sums of money unless they are assured 
of an immediate return. Scientific research is 
absolutely barred by any such restriction. To be 
of any real service it involves the continual spending 
of money, without any tangible and immediate 
return. The British trader works upon quotation : 
he will not place an order until he has got a price : 
but, unfortunately, you cannot get a quotation in 
advance for the discovery of a new material or an 
improved process. Scientific research has, therefore, 
had to be left in this country to universities and 
other institutions that can afford to be independent 
of profit and loss. Thus we find a large amount of 
research work in progress, research which has a 
direct bearing upon industry, but no direct connec- 
tion with industry. It may be safely stated that 
much useful scientific work is done in laboratories 
which is never heard of by the men who could turn 
it to practical account. 

The case for the union of an industry for the pur- 
pose of research is unanswerable, and if Trade 
Councils were set up for no other reason than to 
take care of the scientific side of each manufacture, 
they would be amply justified. It is, fortunately, 
not necessary to argue this matter, because the 
State has already recognised these principles and 
the machinery exists for carrying them into effect. 

The recently established Industrial and Scientific 
Research Department, the outcome of the Research 
Committee of the Advisory Council, is organised 
and equipped ready for the service of our trades. 

f' '^ 

I ''% 


It is prepared to co-operate with any trade associa- 
tion that will take up this vital question of scientific 
research. Sir WilHam McCormick, to whom the 
credit for this new departure is chiefly due, has laid it 
down as a principle that the State will work in this 
matter in conjunction with trade associations. 
In this way it is hoped to get the operations of the 
new Department upon a proper scale, in keeping 
with their importance. 

Hitherto the State has been wiUing to a limited 
extent to assist individual researches, but at last 
the importance of the subject has been realised in 
high places. The near future should see the estab- 
lishment of numerous Trade Research Associations 
working in conjunction with the Government for 
the benefit of whole industries instead of individual 
firms. The relations between the Government and 
trade under the present scheme of the Research 
Department represent the nearest approach yet 
made to the ideal. 

But the Department is perforce doomed to work 
through voluntary associations of the existing type. 
Under Sir WiUiam McCormick it has advanced from 
the practice of dealing with private firms to work- 
ing arrangements with groups of firms in Associa- 
tions. When the State places at its disposal elected 
Trade Councils representing whole industries, upon 
whose attention it has an official claim, and 
whose assistance it can command, then, and not 
till then, the union of Science and Industry will be 



Among the numerous tasks that await the official 
Trade Councils of the future, none is more of vital 
importance than the preparation of adequate 
statistical information. 

When a stockbroker makes a price and completes 
a bargain he has to go to the board and " mark 
it up." Every detail of his trade is thus laid open 
to public inspection. All his experience, all his 
judgments, are thus placed freely at the service of 
the whole market. In return for the information 
as to his own business, which the stockbroker 
gives to every one of his competitors, he receives 
similar information from everybody else in the same 
business. The same sort of procedure is followed 
on most other markets and exchanges. The result 
of it is that these trades are both standardised and 
consolidated, and, while they have to stand the 
full force of legitimate competition, they are free 
from the risks and disadvantages that apply to 
most other trades which are carried on by individuals 
in the dark. 



There is, it seems to me, scope for great develop- 
ment in trade statistics, if the principles under- 
lying the conduct of the trade of the stockbroker 
could be apphed to other businesses. Those of 
us who are closely acquainted with the habits and 
methods of the British manufacturer can re- 
member a time, not so very far distant, when 
auditors and accountants were considered " up-to- 
date " fads, unworthy of the attention of the really 
serious men in trade. That class of opinion has 
now disappeared, and it is extremely rarely that 
one hears, except in the Bankruptcy Court, of the 
absence of a proper system of accountancy in 
connection with any business. 

The next step in this process of development 
will be the recognition of the need for a sort of 
auditor-general for every trade. The advantages 
which accrue from the production of prompt and 
accurate figures in connection with individual 
businesses are now universally admitted. But 
the advantages which would accrue from the 
collection and publication of general figures for 
any one trade are not at present thoroughly under- 

The average British manufacturer is working in 
a condition of hopeless ignorance. He knows all 
about his own business, but so far as the general 
condition of the trade in which he is working is 
concerned he knows practically nothing. His own 
expenses are carefully analysed under proper 
headings, such as materials, labour, rent, insurance, 



advertising, travelling, power, depreciation, and 
trade expenses. He may tell you that materials 
cost him 30 per cent., wages 40 per cent., 
advertising 5 per cent., carriage ij per cent., 
and so on. He knows that the tendency of his 
own business is for materials to go up, and that 
improvements in machinery are reducing the per- 
centage of the labour cost. But he has no idea 
as to the relation which his percentages bear to 
others or to the ideal. 

A manufacturing house with which I am ac- 
quainted figures that a special class of operation 
costs it IS. yd. an hour, and on this basis makes 
its estimates. But for all I know, the proper cost 
of that operation may be is. 5^. or is. 9^., and this 
particular house may be either economical or 
extravagant. That is a mystery which, under the 
present arrangements, cannot be solved. 

If ever the ideal condition is reached in our 
trading organisation, every British industry will 
have a representative Trade Council, and on its 
staff will be a highly paid and highly quahfied 
statistical officer, whose duty it will be to keep the 
trade right on these matters. This statistical 
officer or auditor-general will be furnished with 
powers that will enable him to collect from mem- 
bers of the association all the information that he 
requires for the general good, and will pubHsh 
week by week, or month by month, the result of 
his investigation in the shape of tabulated returns. 
When this is done, the British trader will discover 


that on the average, in his line of business, materials 
cost, say, 35 per cent., labour, say, 42 per cent., 
and carriage, say, 2 per cent. If his own figures 
show materials 40 per cent., he will know at once 
that he is 5 per cent, higher than the average in 
this respect, and that as the average is the product 
of his own figures and others, somebody is corres- 
pondingly below. The result will be that he will 
mvestigate his methods and endeavour to discover 
where the fault Hes. And the end of any such 
system will be a general reduction in costs, or, to 
put the matter in another way, the elimination of 
an appalhng amount of waste which now goes on. 

All this information would, of course, be collected 
by the statistical officer, under proper guarantees 
as to secrecy, and would only be used in such a 
way as not to damage the individual giver of it. 
The strongest objections to any such system would 
probably come from t he " big " men, who are generally 
conceited enough to think that they understand all 
about their own businesses. But the most super- 
ficial study of the problem will show that unless 
the big man represents more than half of the total 
industry, he will receive more than he gives in the 
way of information. 

As a matter of fact, there is nothing original or 
starthng in the suggestion that trade information 
should be collected and pubHshed in this way. The 
electric light industry, tramway companies, gas 
corporations, and municipal enterprises are doing 
every week exactly what I suggest. In connection 



with electric light, the most elaborate statistics 
are prepared week by week and published. Thus 
every engineer in charge of a power station is con- 
tinually engaged in endeavouring to improve his 
figures, and show better results than his rivals. 
The same process is at work in less obvious ways 
in every up-to-date trade, particularly in motor, 
shipping, and rubber companies. In these industries 
it is extremely common for one man to be a director 
of two or three companies. The result of this 
arrangement is that all the information about 
which we are now talking is at the service of these 

There is a great deal more in this subject than 
appears at first sight. We are faced with the 
problem of increasing British trade. It is admitted 
that when peace comes we must do considerably 
more business than ever before. This is the only 
way in which it is possible to meet the charges that 
have been heaped up by the war. Seeing that 
prior to the outbreak of hostiUties we were just as 
busy as we could be, and unemployment was at 
its lowest level, it is obvious that we can only in- 
crease our output by a wholesale system of re- 
organisation, by the elimination of waste, and by 
the study of economical production. 

Now these things can only be done on the basis 
of figures. We must alter our way of looking at 
business. We must give up thinking of individual 
concerns and study trades as a whole. Only in 
that way will it be possible to bring about the 


increase of production that will be necessary to meet 
the financial needs of the future. There is for 
every trade an ideal costing system, and it should 
be the duty of the statistical officer of the Trade 
Council to produce that system. 

Costing systems, which have acquired considerable 
popularity among better-class traders in the last 
ten years, have hitherto been regarded as a means 
of checking competition and keeping up prices. 
They are generally designed to educate the small 
man as to the real costs of business, and thus get 
him out of the habit of quoting unremunerative 
prices. The costing system can be of far greater 
service if generally adopted by whole trades, and, 
if accompanied by the publication of trade statistics,' 
is likely to have the effect of reducing prices and 
cheapening production. 

Mr. W. Howard HazeU, in an article on Cost- 
finding in The Times Trade Supplement of October, 
1916, gives some valuable information as to the 
results secured from the introduction of a proper 
system of costing in the Master Printers' Associa- ; 
tion. Mr. Hazell fails to point out what is obvious 
to any careful observer of printing in the last few 
years, that the activities of the Master Printers' 
Association in this and other ways have brought 
about an all-round improvement in the standard 
of Enghsh printing work, and he would no doubt 
admit that the thorough investigations of the 
Association into costs have had a very great deal 
to do with this improvement. 



" In many well-organised industries there is 
an efficient system adapted to the particular trade, 
which is recognised as essential in any factory where 
good management and good profits are desired. On 
the other hand, there are many trades which are not 
so well organised, where accurate methods for cost- 
finding have not been studied, and where the quota- 
tions for work to be done, or charges for goods 
manufactured, vary considerably. This variation is 
often due not so much to the greater efficiency of 
one factory as compared with another, but to the 
difficulty of arriving at the real cost of production, 
when the question is comphcated by heavy standing 
charges, seasonal trade, and work produced some- 
times by hand and sometimes by machinery. In 
trades where a uniform article or unit is produced, 
such as a ton of coal, a tin of condensed milk, or 
the haulage of a ton-mile, the problem is much 
simpler than where the production is variable in 
form, value, and quantity. 

" It has been found that the result of a correct 
and efficient cost-finding system is not only to arrive 
at all the costs of production, but to preveni waste 
and delays of various kinds, to check errors of 
management, and generally to increase the 
efficiency and economy of the works. It may be 
said that any accountant could instal a cost-finding 
system in a factory, but modern manufacturing is 
so complicated that each industry is faced by 
peculiar difficulties, and though the broad principles 
remain the same, the details must be adjusted to 



the circumstances and condition of each trade. 
Herein lies the advantage of the subject being 
dealt with by well-recognised leaders in the industry, 
as their endorsement of any methods would have 
far more weight than the recommendations of an 
outsider, who might be thought to be pushing his 
ideas for his own pecuniary benefit. 

" The war has shown how greatly German 
trade has benefited by co-operation amongst the 
members of a particular industry; and the old 
Ishmaelite policy of every man's hand against every 
man (which was too prevalent in this country) is 
slowly breaking down. There is much yet to be 
done in organising our ways and standardising our 
methods to meet the present abnormal conditions, 
and the more difficult and competitive times that 
are coming. Probably there is no course more likely 
to lead to success and to bring satisfactory results 
m the immediate future, than for each industry 
in which modern cost-finding methods have not 
been adopted and standardised to investigate the 
question, prepare a suitable system, and then 
carry on an active campaign to secure its general 

Anyone who has worked for half a dozen firms in 
the same line can tell amusing stories of manu- 
facturers jealously guarding " secret processes " 
"special methods," which are really grotesquely 
behind the general level of practice in the industry. 
It has been known for a manufacturer to be at 
great pains to keep information of his methods from 



a rival in the next street— who was, in fact, work- 
ing on a vastly better system. 

We have so far considered trade statistics in their 
relation to costs, but there is, of course, the other side 
of the account which is no less important. There is 
no information which the average trader regards 
as more confidential than that which concerns 
his customers' accounts, and the amount of his trade 
in different towns or different markets. 

On the other hand it can be argued that there is 
no more stupid form of secrecy. If it were possible 
to lay bare the secrets of twenty makers in the boot 
trade it would probably be found that one market is 
permanently overstocked with boots, while another 
is badly neglected. It might similarly be discovered 
that the reason for the low price of a particular type 
of article is that far too much of it is manufactured. 

Statistics and Standardisation run together. The 
diagram on p. 174 illustrates vividly the advantage 
of the application of statistical information to 
processes of manufacture. The diagram was used 
by Professor , Ripper, Vice-Chancellor of the 
University of Sheffield, in a lecture to the Royal 
Society of Arts on May 9th, 1917, and the following 
explanation extracted from the lecture makes its 
meaning clear: — 

" The diagram supposes a piece of work to require 
four operations from the raw material to the com- 
pletion of the finished product. Two pieces of 
work, 'A' and ' B,' were started at the same 
time, but by different methods. In each of the 


respective stages, the irregular A line indicates the 
rate at which the work is done upon the article ' A, ' 
and the irregular B line similarly indicates the rate 
at which the work is done upon the article ' B.' 
It will be seen that during the first operation the A 
process is quicker than the B process ; in the second 
operation it is slower ; in the third operation the A 

C A^B* - D 



process is again the faster, and in the fourth opera- 
tion it is the slower. The total time required to 
complete both articles * A ' and ' B ' is shown by 
the diagram to be the same. 

*' This diagram well illustrates the conditions 
obtaining in all forms of manufacture. It is obvious 
by studying it that each of the articles could easily 
have been completed in considerably less time. 

For example, in the first operation there is no reason 
why the ' B ' process might not, in the future, 
be similar to that employed in ' A,' and if, in each 
operation respectively, the best methods be adopted, 
the operation will be completed in the time given by 
the line OAC, obtained by extending the line OA 
parallel to that of the best process in each case, the 
whole line representing the sum of the best processes. 
This line, therefore, represents the standard method 
of doing the piece of work in question until some still 
better method is discovered. If the four separate 
operations had not been analysed it would never 
have been discovered that any such improvement 
could have been made, and therefore, if no atten- 
tion had been given to the time involved in the 
manufacture of the article, there is reason to fear 
that the quicker process in each case might easily 
have degenerated into the slower methods in each 
case. By summing up all the slower methods we 
get the Hne OBD drawn parallel to the slower pro- 
cesses, and showing that the total time taken in 
this case is several times as great as is required by 
the standard method line OAC. In many branches 
of manufacture, instead of there being only four 
operations, as shown on the diagram, there might 
easily be forty, in which case the difference between 
the summation of the forty best methods and the 
forty slower methods might make a very consider- 
able difference indeed in the final cost of the product, 
resulting in the one case in a handsome profit and 
in the other case in a serious loss. 


The principles of this diagram are of general 
application, and may be used to locate sources of 
loss throughout the whole process from the raw 
material upwards." 

An important field for the activities of the statis- 
tical officer exists in connection with foreign trade. 
There is an immense amount of work to be done 
on behalf of individual industries in the collection 
and arrangement of the statistics of other countries. 
It is quite remarkable how little attention is paid 
to these matters at the present moment. 

A good deal of information of this class has now 
to be obtained from the Commercial Intelligence 
Branch of the Board of Trade, but the number of 
manufacturers who take advantage of these faciH- 
ties is extremely limited. The reason is probably 
to be found in the fact that a Government official 
is seldom the proper person to compile trade 
statistics. No man can possibly be an expert in 
machinery, boots, jam, eggs, and clothing. These 
Government Departments endeavour to do the 
impossible when they produce statistics and reports 
upon different branches of commerce. The only 
man who can give a report which is worth having 
upon the export of boots from America or from Ger- 
many is a man who knows something about the boot 
trade. If the figures are to be useful they must be 
analysed and subdivided in a way possible only to 
a boot man. If each trade were to employ a 
statistical officer for no other purpose than to produce 
accurate and reliable information as to the trade of 



competing countries In neutral markets, the expendi- 
ture and the trouble would be amply worth while. 

But I have not by any means exhausted the many 
sides of this fascinating subject of trade statistics 
and information. We have heard a good deal lately 
about "key" industries, and the Government, 
which has to shoulder the blame for anything that 
goes wrong, is blamed for allowing certain industries 
to drift into the hands of the Germans. I cannot 
see what the Government has to do with it, or how 
this catastrophe could be avoided in the absence of 
statistics and information. 

The war has shown us that we have been relying 
too much upon Germany for certain articles upon 
which our business depends, but if the war had not 
intervened we should still be in ignorance of these 
matters. The fact is that individual manufacturers 
have been carrying on their business in their own 
way, as of course they were perfectly entitled to do, 
and that they have all discovered that certain articles 
could be bought advantageously in Germany. They 
had all hoped that their competitors were ignorant 
of this advantage, and Germany has been allowed 
to secure the business because different British 
manufacturers were not on speaking terms with 
one another. 

We have now discovered these key industries, 
which are in the hands of the Germans, but there 
are many more which are controlled by other 
countries, notably America, and unless some system 
is available whereby our traders will pool this 




information and allow it to be circulated for the 
common good, no power on earth can stop a 
recurrence of the danger, 

I have no desire to enter into the tariff controversy, 
or to express any views on the merits of free trade 
or protection, but it is worth while pointing out in 
this connection that tariffs and statistics must go 
hand in hand. It is surely quite reasonable to ask 
that, in considering the question of a tariff, the 
Government shall require that the industry shall 
show the necessity for some form of protection. 

It may well be that the German or the American 
is capturing the trade by reason of superior organi- 
sation, more highly developed co-operation between 
makers, improved methods of manufacture, lower 
costs, and the elimination of wasteful and extrava- 
gant competition. It would be unreasonable for 
the home trade to ask for protection in order that 
it may bolster up its own antiquated methods and 
thus deprive the public of the advantages of the 
more scientific procedure of the foreigner. If, on 
the other hand, the British industry could show 
through its statistical officer that its methods were 
right and its systems good, and it was still unable 
to meet foreign competition, then it seems to me 
that the case for a tariff would be unanswerable. 

To sum up the whole matter, my plea is for the 
appointment by each Trade Council of a quahfied 
accountant, auditor, or statistician, to bring to the 
industry, as a whole, the benefits which arise from 
proper accountancy and recording methods in 
individual businesses. 



Fiscal reform is no part of my subject, and I should 
not refer to it but for the fact that any discussion on 
trading matters which ignored this question would 
be regarded by some people as entirely beside the 
point. In my judgment, tariff reform has been 
allowed to occupy far too much of the stage. 
This is very largely due to the activities of Chambers 
of Commerce, and other institutions which, by 
reason of the fact that they attempt to cover every 
trade, are unable to deal with the practical problems 
of any. These bodies are driven into politics, and 
they take up tariff reform because the idea of a 
tariff has a way of appealing to the manufacturing 
classes from whom most of their subscriptions are 

I agree with that part of the tariff programme 
which calls attention to the weakness of the British 
industrial position. It is no answer to this argu- 
ment to point out, as most free traders do, that we 
are still at the top of the scale of export business, and 
that America and Germany remain in second and 
third positions. It is perfectly true that we are 



doing a wonderful export business. The per capita 
trade of the three great industrial nations — Great 
Britain, Germany and America — in 191 1, was in the 
proportions of six, three, and two. But the wise 
business man is not the one who counts up the gains 
of years ago and takes satisfaction from them : it 
is he who looks to the future. If America, Germany, 
Japan, or any other country, is allowed to develop 
better trading methods, better systems of produc- 
tion, than we have here, then whatever may be the 
supremacy at the moment, the time is coming when 
we are going to drop behind. 

I part company with the tariff party when they 
claim that these tendencies are the result of a tariff 
only, or that they can be checked by a tariff only. 
The, nation that will win the industrial race is not 
the nation with the most scientific tariff, but the 
nation with the best all-roimd organisation. 

The question of a tariff has been hopelessly com- 
pHcated by poHtical party considerations. Peers 
and poHticians have thrown themselves into the 
debate, and Tariff versus Free Trade has been ele- 
vated to a position altogether too important, and 
held up as a matter of poHtical principle. But in 
reality the advisability or otherwise of a tariff has 
surely nothing to do with principle : it is a matter 
of detail and of expediency. A tariff may be neces- 
sary to one trade and fatal to another. It may be 
good at one time and bad at another. It may, as 
we have lately discovered, be necessary for reasons 
which are reallv military and not economic at all. 



'* There is no need to stir the embers of ancient 
controversies under their whitening ashes. Accord- 
ing to the circumstances of the individual case we 
can be Free Traders, Protectionists, Socialists, at 
the same time in different parts of the Empire." » 

The question of a tariff, however, is extremely 
useful to my argument. If this country does decide 
that it will experiment with protection (a decision 
that I personally hope will never be taken), we shall 
arrive at the point when it will be necessary to settle 
how much per cent, to put upon, say, boots. As we 
are at present constituted, that problem will have 
to be settled by Imperial Parliament elected upon a 
basis which has nothing to do with boots, or worse 
still, by some Committee composed of Members of 
Parliament and their cousins, with probably a noble 
peer thrown in because he happens to be the Chair- 
man of a Boot Company. 

The poor boot trade will not be consulted in the 
matter at all. It is 'true that the Boot Section of 
the Chamber of Commerce will pass some resolution, 
but the Chamber of Commerce is composed of 
avowed tariff reformers, and the Boot Section can- 
not pretend to represent the industry from which it 
takes its name. Surely if we require to know what 
would be good or bad for the boot industry in the 
matter of a tariff, it is an essential preliminary to 
put that industry into a position where it can express 
an opinion on the matter. That can only be done 

^ vSir Joseph Compton-Rickett in the Contemporary Review^ May, 



by the establishment of some representative organi- 
sation on the hnes of that for which I am pleading 

There is another point I should like to make while 
on this question of tariff. The most ardent tariff 
reformer will admit that tariffs should be used as a 
means of defence against the industrial rival and 
not as a means of bolstering up inadequate methods 
or lack of enterprise and ability on our part. If the 
population here is enjoying the advantage of better 
boots by reason of an American invasion, boots 
which are at the same time cheaper and more durable 
than those made at home, then it would be an 
iniquity to use a tariff for the purpose of robbing the 
population of that advantage in order to help an 
industry which was obviously out of date. 

If the boot trade wants a tariff it ought first to be 
made to show that it is properly organised, that it 
IS run upon scientific lines, that there is no waste, 
that Its arrangements for output are of the most 
modern description, that it has made every possible 
use of the services of science in developing its 
industry. If, having done all this, it is still unable 
to meet foreign competition, owing to the presence 
of, say. sweated labour abroad or some local advan- 
tage which cannot be secured at home, then the 
argument for a tariff would be an extremely strong 
one. ^ ^ 

Thanks to the war, we have several very useful 
examples of protection in practice to guide us in the 
consideration of this subject. We have not it is 
true, adopted the full Protectionist programme but 



by means of prohibition, limitation of imports, 
export bounties and actual tariffs, we have accumu- 
lated a number of very convenient illustrations of 
the working of the principles of protection. A study 
of any of these Orders, of the muddle and confusion 
which have followed from them, the hardships and 
injustice which they have inflicted in different ways, 
is quite sufficient to justify the present suggestion 
that no tariff can ever be satisfactorily settled in a 
Central Government Office. A tariff is essentially a 
matter of business, and to attempt to touch it with- 
out consulting those who have experience of the 
industry affected is obviously a clumsy and im- 
possible procedure. 

The Government decided, in the name of the war, 
to set up a system of export bounty on palm kernels. 
It is not intended here to discuss the case for or 
agia.inst this action, but it should be noted that this 
decision was taken and put into effect : and then, 
and not before, ParUament was consulted on the 
matter. The Times report of the debate in the 
Commons on August 4th shows the resentment of 
the House of Commons at this method of issuing 
Orders and discussing them afterwards. But the 
position of the trader under a system of protection 
designed and elaborated in a Government Depart- 
ment would be far worse than that of the House of 
Commons in the matter of the palm kernel regula- 

A very useful example of the absolute need for 
expert advice in this matter of tariffs is furnished 


by the experience of the duty on pianos and parts. 
The Government put heavy duties on foreign pianos 
in order to stop their importation, and at the same 
time to encourage British piano makers to make 
every effort to export home-made pianos, and thus 
m both ways they hoped to help the difficult problem 
of exchange. If, however, they had had the advice 
of an official Piano Makers' Trade Council they 
would undoubtedly have found some way of achiev- 
ing this result with far less trouble than was actually 
involved. The duty on pianos and parts carried 
with it of course a drawback system in the event 
of any of these goods being exported. In view of the 
impossibiUty of manufacturers getting domestic 
suppHes of certain parts, a very great impetus was 
given to the importation of a number of essential 
parts, all makers of fittings, frames, and so on, being 
engaged on munition work. 

The difficulties in the matter became apparent 
when pianos began to be exported containing any 
parts which had paid the new duty on importation. 
The work of identifying the parts on which duty had 
been paid proved too much for the Inspectors of 
Customs. It was found that in a consignment of 
half a dozen pianos about six hours were occupied 
in displaying the identification marks on the various 
parts and packing the crate ready for the inspector's 
seal. One of two things, therefore, happened : 
either the Government lost in inspectors' time far 
more than they got out of the duty on the imported 
parts, or in cases where the inspection was made on 



the manufacturer's premises the manufacturer was 
put to greater expense by claiming rebate than 
the amount which he received in respect of that 

" Consequently," says The Times Trade Supple- 
ment of April, 1916, " an endeavour was made to 
simplify matters. Trade estimates were taken, 
showing the total value of the piano output and the 
proportion exported. The amount paid in duty on 
imported parts was known to the Customs, and it 
was a simple matter to value the average amount 
due for rebate on the value of pianos exported. It 
is understood that the Customs authorities were 
ready to adopt such a system, but at once obstacles 
were created, as one might expect would be the case. 

" The first difficulty was set up by the Custom 
House itself, where the authorities pointed out that, 
much as they would like to adopt the scheme, it 
was contrary to the law under which they were 
working, the Finance Act of 1915, and in order to 
enable them to adopt such a scheme it would be 
necessary for the Act to be amended. There seemed 
to be such a clear case that the President of the 
Piano Manufacturers' Association petitioned the 
Chancellor of the Exchequer to receive a deputation 
to place before him the views of the trade in regard 
to drawback. Mr. McKenna declined to see the 
deputation, and there the matter rests so far as the 
Custom House is concerned." 

American manufacturers have discovered to their 
cost some of the disadvantages of tariffs made in 




high places. In some cases the American tariff 
raises the costs of manufacture so high that not only 
does It prevent the American manufacturer from 
competmg in the foreign market, but it allows foreign 
competitors to get in and undersell in the home 
market notwithstanding the existence of a tariff 
1 his rather complicated point is set out very clearly 
in the Iron Age of New York, which comes to the 
conclusion that dumping may be in some circum- 
stances entirely normal and continuous, and that 
tariffs cannot stop it. 

But the greatest trouble with tariffs is what is 
known in the States as " graft." The most power- 
ful argument against a tariff is that it must tend to 
Wer the standard of Parliament. Even if the 
Bntish legislator should be proof against direct graft 
there will still be a tendency for particular trade 
interests to send men to Parliament for the purpose of 
promoting these interests. Whether under a system 
of tanff we should escape the Parliamentary scandals 
which are associated with every other tariffed 
country in the world remains to be seen, but on the 
introduction of a Tariff Bill every Member of Parlia- 
ment is bound to be subjected to the most persistent 
troublesome, and tempting lobbying. Now if a 
system of trade government were established if we 
were to decentralise all these trade matters, take 
them out of the province of Parliament altogether 
and set up Trade Councils in every trade to which 
these matters could be referred, this grave danger 
of graft would disappear. It would be impossible 



to bribe a Trade Council to alter its views with regard 
to some matter that vitally affected its trade. 

It may be thought, indeed it has been suggested, 
that a Trade Council would at once demand protec- 
tion for its trade. This is not necessarily true. The 
Trade Committee of the Chamber of Commerce 
demands a tariff, but that Committee is not represen- 
tative. The persons upon it go there chiefly because 
they favour a tariff policy and look to the Chamber 
of Commerce to help them to promote it. If instead 
of a Committee of the Chamber of Commerce, there 
were a representative Trade Council elected by the 
votes of every member of the trade, it is extremely 
doubtful whether that elected Council would accept 
the views so freely expressed by these self-appointed 
Committees, which are at present the only spokes- 
men for the industry. 

The point is, however, not worth labouring. It is 
too obvious that no tariff should be contemplated, 
until the true opinion of the trade concerned had 
been ascertained. There is no greater scandal in 
politics than the way in which tariff agitators have 
produced trading examples without any authority 
to speak for the interested parties. 

From the Empire point of view nothing could be 
more dangerous than a revival of our old political 
Free Trade and Protection controversies. To have 
the varying interests of different parts of the Empire 
made the subject of party welfare in the mother 
country is a procedure fraught with extreme danger 
to the future of the State. Imperial Parliament 

. F' 


must, of course, have the last word on the question 
of a tariff, but it is obvious that each industry must 
have a chance to state its case officially and repre- 
sentatively, and this can only be done through Trade 
Councils which can speak in the name of the whole 



It is useless to increase output unless provision is 
made for its disposal. There is no more advan- 
tageous method of disposal than exportation. In 
fact, exportation on an unprecedented scale is 
essential to us for many pressing reasons. 

Ever since the outbreak of war we have been 
exporting credit, and steps must be taken to recover 
that commodity. During the centuries we have 
gradually risen to the proud position of the greatest 
creditor nation. That position has now been very 
seriously weakened and must be recovered. In 
order to finance the war we have been obliged to 
call in loans abroad and to reverse the old position 
by raising external loans. It is quite essential to 
us to get back to our old status in this matter, and 
those foreign loans must be replaced. Hence the 
need for exports. 

But the duty to export can be stated in another 
way. We lead mankind because we have the repu- 
tation for being the greatest civihsing force in the 
world. We stand in the eyes of the nations for 
progress, but progress reduced to practical and 




material terms means boots and shoes, railways 
sanitary appliances, knives and forks, soap, and 
watches, and on the extent to which we supply these 
tmngs rests, m some degree at least, our position 
in the van of civihsation. 

Although we have per head (I am speaking now of 
pre-war times) the largest export business in the 
world, the full possibilities of exportation have 
never been reaHsed in this country. It is the 
greatest folly to rest content with the fact that we 
happen to be doing more business in this way than 
others. We have been at it for centuries ; others 
have only just begun : and it would indeed be a 
marvel if, after a mere thirty or forty years, either 
Germany or America were able to show an export 
position which would compare with ours. 

I cannot too much insist that it is necessary to 
reahse that we are in danger of losing not only 
our lead in export matters, but our export trade 
Itself, unless we improve our methods. The posi- 
tion m regard to any particular industry in a par- 
icular foreign market is roughly this. The German 
trade, through its cartel, has a perfect system of 
representation in that market. There is no competi- 
tion as between Germans. America is in almost the 
same position, where, through one of their export 
associations or through one of their huge trusts 
they have that market properly organised and its 
requirements looked after by an expert staff But 
Great Britain, which for centuries has been in the 
habit of supplying this market, has nothing but a 



personal connection between a number of individual 
British manufacturers and a number of individual 
foreign buyers. Those individual manufacturers 
are in many cases in direct competition with each 
other, and each of them has to meet not only the 
competition of the German and of the American, 
but the still more dangerous competition of his 
fellow-countrymen . 

There is no attempt on the part of that British 
trade as a whole to study or to capture that market. 
So long as it suits individual manufacturers for 
their own individual ends to carry on business the 
nation is content to allow them to do so. But, ' 
except for a Consular Service the inadequacy of 
which I will, for the moment, take for granted, there 
is no attempt on the part of the British nation to 
safeguard its interests in foreign markets. We are 
committed to the poHcy oi.laissez jaire. The Board 
of Trade will issue all sorts of regulations and appoint 
all sorts of inspectors, all of them, however necessary 
they may be, of a nature to hamper industry, but 
no Government Department will concern itself 
with the work of developing foreign markets on 
behalf of British trades. 

There can no longer be any doubt that every trade 
must present a united front to foreign competition. 
The struggle of the future in the foreign market will 
be between German goods, American goods, Japanese 
goods, and British goods, and that competition will 
be sufficiently severe without further competition 
between individual British manufacturers. In fact. 



if the present system remains unaltered, the British 
manufacturer does not stand a chance against the 

We hear a great deal about the German com- 
mercial traveller, and there is no doubt that the 
Germans have developed a system of personal 
representation in foreign markets which is by far 
the best of its kind. Our own colonies are overrun 
with German representatives to such an extent that 
I was told by a hardware dealer in Winnipeg, that 
his records showed nine visits from German repre- 
sentatives to every one from English travellers. 

Travelling abroad is an expensive luxury. To 
maintain an adequate staff of foreign travellers is 
beyond the means of most Enghsh manufacturers. 
In order to arrive at only the pre-war state of per- 
fection of the German in this respect, manufacturers 
must combine. 

There are those who argue that this can only be 
done by means of wholesale combinations and 
amalgamations, the buying up and uniting of busi- 
nesses, and the creation in this country of the five 
million instead of the £100,000 standard as the 
commercial unit. I submit that the same results 
may be possible by a system of co-operation through 
recognised Trade Councils such as I have outlined. 

Another weak spot in English arrangements for 
foreign representation is that the men who travel for 
us are not always experts in the goods which they 
have to sell. In the absence of co-operation between 
manufacturers of a kind, it is extremely common 



for half a dozen houses in quite different trades to 
combine together to pay the expenses of a repre- 
sentative to some market abroad. The result is 
that a representative is chosen by reason of his 
knowledge of the locality to which he is assigned, 
his knowledge of the language, and his general 
commercial ability. He cannot be an expert in the 
half a dozen trades which he is called upon to repre- 
sent. He can do little more than show the printed 
catalogue and use such personal influence as he 
possesses to secure a share of the orders that are 
going. If instead of different trades clubbing 
together to meet the expenses of a foreign represen- 
tative, the custom were for men in the same trade 
to join hands, it would be possible to send to each 
market an expert in each industry. 

We are constantly told of the abiUty of the Ger- 
man to adapt himself to the requirements of a 
particular market. Our Consuls have written reams 
to show how German goods are so made as to meet 
the peculiarities of the buyer. The reason for this 
is, in my judgment, the fact that the intermediary 
between the German and the buyer is, as a rule, a 
technical expert in the goods which he is called upon 
to sell. These trifling alterations, which, however, 
make for success or failure, are matters which 
demand the attention of the expert. 

But apart from these details it is obvious that 
the best salesman is the man who is thoroughly 
acquainted with the goods which he has to sell. 
The old system under which we export our products 



through some merchant house which knows all 
about bills of lading and customs' peculiarities and 
ships everything from boot-blacking to pianos, is 
doomed in face of the method which the Germans have 
developed, through their cartels and selling organi- 
sations, of placing the whole resources of Germany 
m any particular industry in the hands of an expert 
staff in each market. 

While on the subject of export it may be interest- 
ing to notice what is happening at the moment on 
the other side of the Atlantic. The European War 
has given to American exporters great opportunities 
for expansion, and, as British manufacturers know 
to their cost, full advantage has been taken of those 
opportunities, i 

The Chief of the Bureau of Foreign and Domestic 
Commerce at Washington, Dr. Edward Ewing Pratt, 
in a Report to the International Trade Conference 
held at New York, in December, 1915, says :— 

" The growth of our export trade in certain parts 
of the world is worth a httle very serious con- 
sideration. If we compare our foreign trade in 
1913 with our trade in 1915, we find some very 
mteresting results. Supposing we compare the four 
months— June, July, August, September, 1913, with 
the same four months in 1915 : we find that during 
that period our trade with Canada has decreased 
about 9 per cent. ; our trade with Central America 

'Since these lines were written America has joined the Allies but 
It does not follow that American manufacturers will, on that account 
lose all the advantages which the war has brought to them 



has remained practically stationary ; our trade with 
South Africa has increased 12 per cent. ; our trade 
with South America has increased 22 per cent. ; our 
trade with Asia has increased 51 per cent. ; and, 
perhaps most remarkable of all, our trade with 
AustraUa has increased 77 per cent. These facts 
demonstrate beyond question that our trade with 
countries unaffected directly by the war has in- 
creased temporarily. 

" The next important question for consideration 
is whether or not we shall be able to hold this trade. 
Some people are of the opinion that following the 
war the European countries will flood, not only our 
own market, but the other markets of the world, 
with cheaply-made, low-priced manufactured 
articles. The predominance of opinion, however, 
seems to be, and I must confess that the facts and 
logic of the situation seem to urge this view, that 
the costs of production and consequently prices 
will be much enhanced in European coimtries and 
that, in spite of the best organised and the most 
vigorous efforts on the part of our European com- 
petitors, they will not be able to compete in our 
own markets and in other markets of the world on 
as favourable terms as they have been able to 
compete heretofore. I believe, and I find that 
most of those who are professionally engaged in 
foreign trade hold a similar opinion, that we shall 
be able to retain the major part of the markets 
which we gain during the present disturbed 
world conditions." 


Newspaper writers are very fond of telling us 
what glorious opportunities await the British 
manufacturer in Russia. But they fail to point 
out what is happening to-day between America 
and Russia, and the struggle that is in front of us 
when peace comes to catch up the start which 
America will have had. Dr. Pratt, in the same 
Report, says : — 

" There is one market especially which is worth 
the most serious attention on the part of every 
manufacturer and exporter. I refer to Russia. The 
imports into Russia during the last few years, 
averaged about $500,000,000 ; roughly one-half 
of these imports have come from Germany. Not 
all of those products have been of German origin, 
for the Germans have, in many cases, acted as the 
middleman for the Russian trade. Here is a great 
trade open at least on fair and equal basis to the 
American manufacturer and exporter. We must 
not forget that Russia is a country of great natural 
resources, a country which is in large part unde- 
veloped. Her railroads, her ports, her public 
utiUties are still in large part to be built. Her 
mines and natural resources are in large part still 
to be developed. And let me point out that Russia 
during the next fifty years will go through a period 
of development very much like that through which 
the United States has been going in the last fifty 
years. Our manufacturers and exporters are par- 
ticularly well qualified to meet the urgent demands 
of the Russian market." 



The American Government understands the needs 
of expert foreign representation much better than 
does our own Board of Trade, as is shown by the 
announcement that the Bureau of Foreign and 
Domestic Commerce of the United States has 
appointed a special agent to investigate the field 
for railway equipment and supplies in the far 
East, Australia, and South Africa. The British 
Government would in like case have sent a Trade 
Commissioner to one of these places, with general 
instructions to report on trade conditions, but no 
case is on record, so far as I am aware, of the Govern- 
ment ever having appointed a special agent for 
the purposes of a special industry to investigate 
a market. 

But the Germans and Americans are not the 
only people who understand the value of co-opera- 
tion in pushing foreign trade. Wherever we turn 
abroad, this idea seems to have found a greater degree 
of acceptance than it has in Great Britain. Sweden 
is a very good example of successful co-operation 
for the purposes of export. There is a General 
Export Association of Sweden, as well as a large 
number of specialised bodies, the most active of 
which is probably the Swedish Wood Export Asso- 
ciation, which practically controls the great trade 
that Sweden does in timber, paper, and paper- 
making materials. 

Canada can also claim to set an example in this 
way. The Export Association of Canada is one 
of a number of bodies that are founded upon this 




idea. Its objects are to secure detailed informa- 
tion and actual orders for its members, to introduce 
representatives of Canadian firms to the most 
important buyers of other markets, to collect 
and make shipments of export orders, and where 
possible to finance the same. The Association 
has already opened offices in different parts of the 
world, and arrangements are being made for estab- 
lishing large sample rooms in important centres. 
It was responsible for an interesting exhibit of the 
products of its members at the Lyons Fair. It 
is also establishing machinery for the sale of Canadian 
goods in markets as far removed as Siberia. 

Co-operative export trading is beginning to be 
understood in Great Britain, and quite a number 
of trade associations are debating the matter. 
For instance, the National Leather Goods Manu- 
facturers' Association has before it a scheme 
whereby the members of the association would 
combine to send out to the markets of the world 
an exhibition of British-made leather goods over 
a given period in certain selected centres. 

But the loosely formed voluntary trade associa- 
tions, which are all that we possess at the moment, 
are necessarily badly handicapped in any scheme 
of this kind, and success is only to be achieved in 
those rare cases where self-sacrificing individuals 
are prepared to take the whole responsibility upon 
their shoulders. Opinion in every trade is ripe for a 
scheme of combined action, and the opportunity for 
the Government to institute such a plan is unique. 



" We all have some advantages over one another," 
said the late Mr. Arthur Chamberlain, " and we had 
much better put all these advantages together, and 
pit our combined best against a foreign country. 
If we do that we shall then constitute a better whole 
than either Germany or America." 

As with most present-day problems, the Govern- 
ment is endeavouring to do something in the matter, 
and, as is almost always the case, they are building 
from the top, working from a central department, 
and attempting the impossible. The Foreign Office 
has awakened to the need for improvement in oiu: 
export machinery, and has consequently made a 
bargain with the Chambers of Commerce for the 
better collection and use of Consular information. 
The Consular Service is to be strengthened, and 
Consular Reports are to be circulated with greater 
promptitude through Chambers of Commerce. 
Special forms are to be available for members 
of Chambers of Commerce who will be able to state 
what are their requirements, and Consuls will 
endeavour to fill those needs. 

This display of energy on the part of the Foreign 
Office is much to be regretted, as it represents the 
patching up of a system which, as I have tried to 
show, is thoroughly bad in principle. British Trade 
will never reach its required dimensions so long as 
the information and the assistance given to it is 
that collected by Consuls and officials of Chambers 
of Commerce, all of them excellent and well- 
meaning persons, but none of them experienced in 




particular trades. It is imperative that we should 
learn from the Germans and the Americans in these 
matters, and decide that every trade shall be dealt 
with separately and given its own machinery for 
dealmg with each foreign market. 

The labour problem and every other problem wiU 
m the end depend upon proper distributing and sell- 
mg arrangements abroad. It is useless to increase 
output, to improve machinery, or add to our pro- 
ductive capacity unless we have the proper facilities 
for the disposal of our productions. In this matter 
of distnbution we have one of the weakest Unks in 
the Bntish commercial chain. 

My suggestion is, therefore, that every Trade 
Council should have as one of its duties the work of 
promoting foreign trade in the products of its 
industry. Each Council will thus find it necessary 
to appoint an Export Committee and Export 
Officers, and to amass for its use aU the statistics 
and information that are available with regard to 
Its industry. When that is done, trade statistics 
and commercial information will assume a new signi- 
ficance. They will be prepared by experts who know 
what IS wanted ; they will differentiate between 
classes of goods and grades of materials ; they will 
be of real value to the business man. The Export 
Officers of each Trade Council will be responsible 
for the proper representation of that trade in every 

™!, uu^*''" '^°'^^- Co-operative advertising 
and exhibition schemes in foreign markets wiU 
become the order of the day. Those readers who 



had the opportunity of visiting the'last few Inter- 
national Exhibitions will be aware that by far the 
best exhibits at Brussels, Ghent, and Turin were 
those arranged on co-operative lines by the Society 
of Motor Manufacturers and Traders, the Publishers, 
the Textile Printers, and other organised bodies. 

To sum up this question of export, the position is 
that American trusts have done extremely well, 
that German cartels have done better, and that 
British co-operation, if it can be brought about, will 
do best. 







The number of questions which might be considered 
m connection with the study of the development of 
trade is legion. There is Uterally no end to them, 
which fact is the strongest argument of all for the 
adoption of a bold scheme of devolution^and the 
setting up of numerous Uttle authorities'" so that 
all these things may be decentralised. 

For instance, we have so far said nothing about 
the development of the Empire, the arrangements 
that will undoubtedly be made for facilitating trade 
within the Empire, the need for becoming self- 
supporting with regard to certain raw materials and 
key industries. It will, however, be obvious that 
these problems are much more likely to find a 
satisfactory solution when we ourselves are organised 
at home. It is altogether characteristic of the 
Bntish way of doing things that our statesmen 
should be inviting us to make orderly arrangements 
with regard to trade covering half the globe, while 
we are in a condition of chaos so far as the trade of 
this httle island is concerned. 


To take a concrete example, let us suppose that 
some American trade has secured too much of a 
foothold in the Australian market. It is, therefore, 
proposed to make some arrangements for tariffs, 
or shipping rates or subsidies, in order to divert that 
trade within the Empire. Such arrangements as 
these are definitely suggested by leading statesmen. 
It will be seen at once that any such scheme cannot 
be carried out with the maximum success until the 
home industry concerned is so organised as to be 
in a position to express an opinion and give expert 
advice upon the matter. 

We have avoided any reference to retail organisa- 
tions. This is a subject by itself, yet very closely 
related to that of manufacturing organisations. The 
principles underlying both are the same. It is 
obvious that if the State were to set up a system of 
Statutory Trade G)uncils, that system would have 
to embrace every form of trading, manufacturing, 
wholesaling and retailing. The retail associations 
that would grow up in this way would constitute 
a very useful check upon manufacturing associations. 

Then there is a whole series of professional and 
semi-professional associations. It will be seen in 
the recommendations set out in our last chapter 
that we ask for a trading franchise, which must, of 
course, be also a professional franchise. Every 
man is to have a vote according to his trade. In 
this way, whatever may be the form of each man's 
activities he will secure a right to a vote in some 
statutory association. The system must be uni- 



versal in its application, and it would have the effect 
of making not only trade unions and trade associa- 
tions, but retail bodies and professional societies 
absolutely representative in their character. 

It would cover, for example, Banking, and would 
give us an official Bankers' Council with statutory 
obligation to provide the nation with such banking 
faciHties as were required, and would remove the 
need for the Government to dabble in banking in the 
way that it has recently done with the British Trade 
Corporation, a very necessary and useful institution 
of that half-baked variety to which we seem to be 
committed in this country. The mere statement of 
the fact that it is to have a capital of ten millions, 
that it must not commence business until at least 
^250 000 has been actually paid up, is quite sufficient 
to show how inadequate it is to deal with the vast 
needs of the future development of British industry 
There is another great subject that should be 
explored did space permit. Exhibitions and adver- 
tising, when we come to deal with whole trades 
assume an importance that has not been previously 
realised. The duties of the nation in the matter 
of foreign exhibitions was recognised in a small way 
by the estabhshment of the Exhibitions Branch of 
the Board of Trade. Under a Minister of Commerce 
supported by the numerous Trade Councils, the 
Bntish nation could go out into the world with 
exhibitions worthy of British industry. 

It is useless to speculate how much better we 
should have been prepared for war had trade been 



organised before 1914. There can be little doubt 
that our enemies have obtained great advantages 
over us from the facility with which they were able 
to summon to their aid whole industries, and use, 
instead of improvised Directors and Controllers, the 
trained officers of German cartels for national 






It is always very difficult to foretell exactly what 
the results of a new scheme may be, and it is more 
than usually difficult to prophesy when the subject 
is connected with trade and industry, markets and 
futures. My contention is that the interest in a 
trade which would be created by a statutory power 
like the proposed Trade Council, and the bringing 
together of the leaders of that trade for mutual 
discussion and common action, must lead to better- 
ment and progress. But there is at least one detail 
in my proposals about which one can prophesy with- 
out much fear of error and with a very fair amount 
of certainty. 

It is suggested that each trade should be provided 
with a statutory Council elected like our local 
authorities and holding office for a period of, say, 
three years. This Council would be elected by the 
various trade associations and trade unions interested 
in one industry. The triennial election of the Trade 
Council would focus all the many questions affecting 
the trade and give an opportunity to everybody with 
views on the development or .betterment of that 
trade to come into the open and have his schemes 


discussed. The mere fact of holding an election in 
the Furniture Trade would bring out every idea for 
improvement and progress, and would cause a 
general discussion of trading problems which must 
have a powerful influence for good upon the trade 
as a whole and each individual member of it. 

We therefore propose to indulge in a little 
prophecy, and endeavour to describe the proceedings 
at an election of the Furniture Trade Coxmcil. 

We will imagine that every furniture man is a 
registered voter for this purpose, and that the Furni- 
ture Trade Council has been in existence for a period 
of three years, and that we are now engaged upon 
the second triennial election to that body. In order 
to make the prophecy more complete in detail, we 
will asstune that the trade franchise and the system 
of election have been settled on the following lines. 

Every furniture man has the right of a voting 
membership of one of the trade associations or trade 
unions. We will assume that there are fifty-nine 
seats on the Furniture Trade Council, this number 
of fifty-nine having been agreed as convenient in 
order to provide sufficient members to undertake 
all the numerous Conmiittee duties that fall within 
the scope of the Council. Of these fifty-nine 
members, twenty-four are delegates from trade 
associations, twenty-four are delegates from trade 
unions, and the balance of eleven are aldermen 
elected by the Council on the nomination of various 
authorities : two are men of science nominated 
by the Industrial and Scientific Research Depart- 



ment ; two are educational experts nominated by 
the Board of Education ; one is a financial expert 
nominated by the Bankers' Trade Council. A legal 
expert from the Law Society, a statistical expert 
from the Board of Trade, and a health expert from 
the Mmistry of Health complete what may be de- 
scribed as the official element in the Council. There 
are also a Deputy-Chairman and a Vice-Chairman 
elected by the Council on the nomination of the 
Ministry of Commerce, and a President, who is elected 
by the whole body of Councillors and Aldermen. 

The twenty-four delegates from trade associations 
are elected :— Fourteen by the National Wholesale 
Furniture Manufacturers' Association : six by the 
Furnishers' Chamber of Trade : two by the Furnish- 
ing Section of the Chamber of Commerce ; two by 
the Cabinet Trades' Federation : these being the 
proportions due to those bodies reckoned by the 
strength of their respective membership. The 
twenty-four delegates from trade unions are elected 
m a similar way by the various unions interested 
in the furniture trade, the numbers being allocated 
m proportion to the strength of membership. 

This Council has, then, been working for a period 
of three years, and having completed its statutory 
term, has to seek the suffrages of its constituents. 
In order thoroughly to appreciate exactly what 
will now happen, the reader should take an oppor- 
tumty of inspecting the post bag of a Member of 
Parhament for, say, three consecutive mornings. 
He will then be in a better position to understand 



the full significance of the introduction of a system 
of election into an industry like the Furniture 
Trade. Many hundreds of tons of literature which 
is now deUvered annually to Members of Parhament 
and candidates for Parliament would be diverted, 
and delivered instead to members and candidates 
for the various Trade Councils. 

A great saving and a great improvement would 
be introduced merely in this way. There are many 
hundreds of societies with excellent objects who 
have no means of carrying those pbjects into effect 
except by the almost useless method of worrying 
Members of Parhament about them. Seeing that 
most of the§e subjects are of no interest to Members 
of Parliament, or at least that Members of Parhament 
,have no interest in them and understand httle or 
nothing about them, the waste of effort in good 
causes in this way alone is enormous. All these 
propagandists will now be able to approach the right 
people in the numerous trade elections that will be 
held. When the candidate for Council honours in the 
Furniture Trade opens his post the morning after 
nomination, he will find something like the following. 

The Society for the Introduction of the Metric or 
Decimal System will send him specimens of their 
literature and invite him to pledge himself to an 
alteration of those mediaeval methods which, accord- 
ing to their view, hamper our progress in foreign 
markets. There will be some interesting light 
reading to keep the candidate busy for hours, enter- 
ing deeply into arithmetical matters which will 



probably be quite beyond his range. A Uttle further 
down in his post bag he will find another letter from 
another Society who will tell him that the British 
system of weights and measures is based on the 
measurements of the earth and the Pyramids, that 
it has in fact divine origin, and that no vandal must 
be allowed to interfere with it. It will be pointed out 
that the cost of the alteration would be enormous, 
that it would undermine the whole of our industrial 
structure, and that no benefit could possibly accrue. 

The Union of Clerks and Shop Assistants will then 
seek the attention of the Trade Council candidate, 
and will ask for permission to wait upon him in 
deputation in order to explain their objection to 
the system prevaiHng in the furniture trade in the 
north, and to ask him whether he will pledge himself 
to vote for the universal application of the London 
system to the whole of the trade. If he is prepared 
to take that view, the Union of Clerks and Shop 
Assistants will pledge themselves to support his 
candidature. If not, he will be threatened with the 
dire penalty of being pubHshed in their black list. 

The Incorporated Society of Secretaries will 
call attention to the prevalence in the furniture trade 
of the practice of employing clerks without qualifica- 
tions as secretaries of limited companies, and demand 
action by the Council. 

The Early Closing Association will point out that 
the furniture trade is one of the worst offenders in 
the matter of shop hours, and that they have already 
secured an undertaking from the Drapery Trade 




Council that if the Furniture Trade Council will 
enact the closing of retail estabhshments half an 
hour earUer on Wednesdays, the Drapery Trade 
Council will follow suit. As the two trades cater 
for the public in kindred ways, uniformity of action 
between them is essential. 

The Workers' Educational Association will send 
a really big parcel of hterature and will call the 
attention of the candidate to the very little that is 
done by the Fimiiture Trade Council in the way of 
endowment of exhibitions and scholarships. If the 
candidate will sign the enclosed form and undertake 
to support the aims and objects of the Workers' 
Educational Association, that body will in return 
print and circulate to the whole of the electorate 
special Hterature inviting support to his candidature. 

A communication will next be received from the 
Shipping Trade Council, which will ask the candidate 
to express his views as to action which they propose 
to take in order to bring the Railway Companies 
to heel in connection with through bookings for 
small consignments via the Panama Canal. 

The Home Rule for India League will also write 
to the candidate and send him a lengthy pamphlet, 
entitled " India's Appeal to Canada," pointing out 
that the furniture trade in Canada by means of the 
importation of Hindu labour is securing an advan- 
tage at the expense of the furniture trade in other 
parts of the Empire, and inflicting injustice and 
wrong upon India. The candidate will, therefore, 
be invited to use his influence if elected to the Fumi- 




r ■»;'"*. 


ture Trade Council, to bring the Canadian furniture 
people to reason in this important matter. 

To the ordinary reader, this weary catalogue of a 
single morning's post received by the candidate for 
the Furmture Trade Council may seem fantastic 
but those who have any experience of the corres- 
pondence of a pubhc man will agree that the descrip- 
tion IS not only true, but that the nature and variety 
of the subject matter are understated and under- 

So far we have merely dealt with general public 
questions, many of them of great importance and 
upon which these Trade CouncOs may have a very 
direct and practical influence. If, however, Trade 
Councils were to be established merely in order to 
reheve Members of Pariiament of the attentions of 
these numerous excellent societies, httle could be 
said in support of them. 

The candidate for the Furniture Trade Council 
will, of course, have his life worried out of him by 
people with ideas, schemes, and grievances in connec- 
tion with the trade itself. A single morning's 
postal communications of the candidate under dis- 
cussion will, in addition to the general matter 
mentioned above, be something hke the following. 
The Wycombe Chair Makers will write to call 
attention to the absurdly antiquated samples of 
furmture installed at Woolwich by the War Office 
and the stupidity of that body in insisting upon 
present-day suppUes being made to out-of-date 
patterns. They will point out that if the War 



Office would only take advantage of modem methods 
of manufacture and instal machine-made samples 
and invite tenders for machine-made goods, a lot of 
expense would be saved to the nation. The candi- 
date will be asked whether he will pledge himself 
to agitate through the Trade Council and the 
Ministry of Commerce for an alteration in the 
procedure of the War Office. 

The Furnishing Trades' Benevolent Association 
will write, pointing out that the income of the Charity 
is altogether inadequate to deal with the demand for 
p)ensions and places in the Orphanage, and suggesting 
that the F.T.C. should be empowered to make a 
grant from public fimds of £2,000 a year to form a 
fixed income which would enable them to carry on 
their work with a greater degree of security and 
success. The Benevolent Association would offer 
the nomination of six places on their Executive 
Committee in return for this grant, and invite the 
candidate to move in the matter in the new Council. 

The Midland Committee will write to call atten- 
tion to the abuses which exist in consequence of the 
practice that has grown up of builders imdertaking 
cabinet work, and enclose a number of rules which 
they suggest should be adopted, defining the limits 
of the activities of builders in interior woodwork. 

The Retail Section of the Furnishers' Chamber of 
Trade will send to the candidate a manifesto object- 
ing to the practice adopted by certain manufacturers 
of selling surplus stocks through auction sales, and 
asking the Trade Council to legislate on the matter. 




A communication from Mr. S. J. Waring will 
be the next to be opened, in which he wiU announce 
his mtention of organising a great national campaign 
on the subject of art and economy. Mr. Waring 
will point out how the union of art and economy 
would bring happiness to the homes of the miJhon 
while mcidentally benefiting the furniture trade' 
He will suggest that the Furniture Trade Council 
should adopt the subject and undertake this great 
work m its official capacity, his theory being that 
if the pubhc interest could be aroused to a due sense 
of the importance of surrounding each citizen with 
things of beauty, the moral and intellectual tone of 
the nation would be greatly improved. 

The Design and Industries' Association will ask 
the candidate to agree with them that most of the 
furmture which is made violates all artistic principles 
and they will also demonstrate that a simplification 
of design would not only add to artistic values but 
reduce costs of manufacture. They, therefore, ask 
for the right to nominate three aldermen on the' new 
Trade Council to promote these objects. 

The Society of Polishers will address to the candi- 
date a manifesto asking for a re-arrangement of the 
constitution of the Workshop Committees in the 
factones of the trade, pointing out that poUshers in 
proportion to their importance and numerical 
strength, are not properly represented on these 

The Chair Makers' Union will ask the candidate 
to support a recommendation that the trade should 



adopt the Unemployment Section of the Insurance 
Act. The Carvers' Society, on the other hand, will 
send a strong protest, threatening to vote against 
the candidate unless he will undertake to oppose 
by every means in his power the imposition of 
Unemployment Insurance upon the Furniture Trade. 

There will then be a whole series of communica- 
tions from interested parties on the never ending 
subject of railway rates, and each will send remark- 
able specimens of inequalities and call for emenda- 
tions in the classification of different articles. 

Next there will be a dozen or so letters and 
memoranda from people interested in alterations in 
the tariff, either here or in the Colonies of in foreign 

An enthusiast will write and invite the candidate's 
attention to a scheme for the establishment of a 
co-operative insurance office within the furniture 
trade, and will give figures to show what large sums 
are annually paid by this trade for the simple pur- 
pose of swelling the dividends of Fire-insurance 

The candidate will next be invited to devote his 
attention to the intricate question of Profit-Sharing 
in its application to furniture manufacture. 

The Society for the Promotion of Public Health 
will circularise the candidate and give him informa- 
tion and figures on the subject of lung trouble in the 
bedding department of the furniture trade, and ask 
him to support the regulations which they suggest 
for the elimination of this evil. 


There will then be communications from the Hire 
Traders' Protection Association, seeking the in- 
fluence of the Furniture Trade Coimcil to amend 
the law of distraint, so that they may the better be 
able to enforce the payment of instalments imder 
hire purchase agreements. And to balance these 
will be letters from those who take the view that 
purchase on the instalment plan is an immoral 
proceeding, and that the Furniture Trade Council 
ought to use its powers to get rid of it. 

If the reader by this time is not thoroughly weary 
of the catalogue, there is a great deal more to go 
through before we have exhausted the morning's 
post of the candidate for election to the Fiuniture 
Trade Council. We have so far dealt with two sets 
of subjects covering questions that are at present 
before the public and the trade. The first are 
matters of general public interest : the second 
matters of more particular trade interest. But there 
is still a third batch of subjects which have only 
come into the region of practical pohtics since the 
establishment of the Furniture Trade Council, for, 
be it remembered, we are now discussing the second 
triennial election of that body. 

The candidate will, therefore, have to withstand 
a terrific bombardment from folk who are suffering 
under a sense of grievance from the actions of the 
previous Council, and those who are full of new 
schemes for the betterment and advancement of the 
industry. The next batch of letters will therefore 
contain communications of the following kind. 



The Gloucester Committee will call attention to 
the inadequacy of the Bristol University's technical 
education in its application to furniture, and point 
out how badly handicapped is the West of England 
in this respect as compared with Yorkshire and 
Lancashire, the technical schools under the 
Manchester, Leeds, and Sheffield Universities being, 
in each case, far superior to those installed at Bristol. 
The candidate will be required to pledge himself 
to bring the subject before the Education Committee 
of the F.T.C., and not rest until that Committee has 
persuaded the Education Officer and the Ministry of 
Commerce to move in the matter. 

A Sheffield elector will point out that the instructor 
in Cabinet Making at the local Technical School, 
although he holds a lot of South Kensington certifi- 
cates, is not a practical man, has never been at the 
bench, and is consequently not fitted for the post. 
The candidate will be urged to see that all such 
appointments are given to men of actual experience. 

Some bright brain will then unfold to the candi- 
date a scheme for the co-operative use of railway 
trucks, framed on Mr. Sidney Webb's well-known 
plan for reducing the expenses on the transport 
of coal, while another expert will demand the estab- 
lishment of a Furniture Trade Motor Service, point- 
ing out that in this way a special type of vehicle 
suited to the peculiar requirements of fumitm'e 
could be introduced, and much expense in packing 
and breakages thus avoided. 

But the serious part of the candidate's work will 







begin when he is invited to inquire into the delin- 
quencies of the Furniture Trade Commissioner 
in Egypt, delinquencies which are proved by the 
fact that the trade's exports to Egypt are only one- 
third in value of those to Nigeria. This poor result 
will be attributed to the fact that the Egyptian Com- 
missioner was appointed without due care, that his 
previous experience and training did not fit him for 
the job, and a change should therefore be made. 

An export enthusiast will call attention to the 
utter inadequacy of the State grant of 2s. 6d. per 
;f loo which was secured by the late Council for the 
encouragement of export. He wil) point out that 
this sum|only produces ;f 1,500 per annum, and that 
that amoimt of money requires multiplying many 
times in order to^'provide a sufficiently large and 
expert staff to look after the interests of the trade in 
foreign markets. He will, therefore, suggest that 
the Treasury should be approached with a \dew 
to raising the grant to 3s. 6d. per £100, and that a 
levy should be made upon the trade for a further 
3s. 6d. per £100, so that the Council might have at 
least £4,000 or £5.000 a year to spend in propaganda 
work abroad. 

Another communication, from North of the 
Tweed, will complain of the imfair^ allotment of 
space in the Travelling Exhibition of Furniture 
Samples which the F.T.C. had sent round the world, 
and demand that in future in arrangements of this 
kind space should be divided on a territorial basis 
instead of a capital basis. Under such a system of 



division Scotland would secure one-fifth of the 
available accommodation instead of only one-seventh 
which was allotted to it under the capital method. 

A manufacturer in Manchester will object to the 
arrangements made by the Furniture Trade Council 
for a subsidy to the Central Industrial Research 
Institution, and insist that the Fmrniture Trade is 
of sufficient importance to warrant a research staff 
and building of its own, and point out the additional 
expense thus incurred would be more than rewarded 
by the benefits that would accrue to the industry. 

Another highly technical and controversial matter 
to which the candidate will have to give his atten- 
tion will be the Secondary Education scheme now 
in operation, under which youths from foiuleen 
to eighteen are compelled to attend a technical 
school at specified times. The instruction given, 
the hours arranged, the instructors employed, and 
many kindred matters will all come under review. 

Innumerable argimaents will next be put forward 
for an emendation of the official costing system, 
and the candidate will be invited to acquaint himself 
with figures to prove that the official estimate of 
warehouse charges at 20 per cent, is far too high or 
far too low, while 7J per cent, for overhead charges 
is out of all reason. 

To exhaust the post of the candidate we should 
have to wade through a great many more letters. 
OneTmore only must be mentioned, which comes 
from the National Standardisation Committee, 
offering the candidate their support if he will move 



for the appointment of a Standardisation Committee 
of the Furniture Trade Council, and pointing out 
how the adoption of the principles which have saved 
the British Engineering Industry would also tend 
to great economies and greater efl&ciency in the 
manufacture of furniture. 

This hst speaks for itself. To the reader who is 
not deeply interested in the progress of industry it 
may appear to be composed of a lot of minor matters, 
but to any experienced manufacturing man who will 
read it with the necessary amount of imagination, 
it will open up vast possibiUties, possibiUties which 
cannot be reahsed until we find some way of making 
the study of the fmniture trade and every other 
trade a matter of necessity to those concerned in it. 

The effect of such an election campaign as we have 
described would be to decentrahse all sorts of 
important questions, and bring them before the 
attention of men who have the experience and the 
power to deal with them. But it would do a great 
deal more than that. It would awaken general 
interest in the welfare of the furniture trade. It 
would teach every member of that trade a great deal 
about it of which he was not previously aware. It 
would turn every furniture man from an amateur 
into an expert, because it must never be forgotten 
that under the individualistic system we are all of 
us amateurs. We are struggling on with our par- 
ticular branch of business with the advantage of such 
experience as we have been able to pick up within 
the four walls of our own shop, but we have never 



had the advantage of full discussion of all our 
problems by all those engaged in a similar way. 

The introduction of the franchise and of a system 
of election to Trade Coimcils will have another very 
important, indeed, a revolutionary, effect. It will 
be found that the men elected to these Councils will 
not in most cases be the same persons who now 
occupy the seats on self-appointed and non-repre- 
sentative bodies of trade associations. As soon as 
the trade association is endowed with real powers, 
powers to do good or to do harm, as soon as it is 
recognised as an authority by the Government, 
then the great body of traders who have hitherto 
stood aloof from the association movement will begin 
to take an interest in it. The serious men in every 
trade, the men whose lives are devoted to business, 
will come out into the open, and most of them 
have far superior claims to positions in the trade 
authority than the amateurs to whom the repre- 
sentation of trade is very largely left through 
voluntary associations. The best men in industry 
have no time to waste, and therefore refuse to attend 
association meetings where serious business cannot 
be conducted. It may thus transpire that the 
views which have been so loudly proclaimed by self- 
appointed leaders of industry with platform and 
other ambitions, are not the views of industry at all. 

The very existence of a Furniture Trade Council 
with a Furniture Trade electorate at the back of it 
would bring a vigour, Uf e, and power to the industry 
that it could not secure by any other means. 






In my introductory chapter I outlined a system 
of statutory Trade Councils working under a Minister 
of Commerce, which seems to me to offer a solution 
of most of our industrial problems. Having en- 
deavoured to show in a cursory way the need for 
these bodies, and having pointed out a few of 
the many fields which are open to their activities, 
it now remains to set out the suggested organisa- 
tion rather more definitely and in greater detail. 

It would be idle to pretend that the following 
scheme is not full of points which will require 
much discussion. It must, therefore, be regarded 
as a first attempt at a working plan, and nothing 

A. A Trade Franchise. 

The basis upon which the whole scheme rests 
is the introduction of the representative principle 
into trade, and this involves the estabhshment of 
a trade franchise. The exact form that this 
franchise would take, the exact qualifications that 
would be necessary to it, and its final working 




details, must be matter for fuller consideration 
and debate. But the following rough suggestions 
will at least show that the idea is not imwork- 

..^ I would open out the existing trade associations 
and trade unions in much the same way that 
the Friendly Societies were opened out by the 
Insurance Act ; and I would give to every man 
and woman employed in an industry the right to a 
voting membership of one or other of these bodies. 
It is obviously impossible to compel a trader to 
join his trade association, and it is equally im- 
possible to compel a trade association to admit 
an individual to full membership. The association 
or the union must have the right of selecting its 
own members for its own ordinary purposes, but 
just as the Insurance Act has multipUed the mem- 
bers of the Friendly Societies without affecting the 
rights and interests of the original members, so 
these trade associations and unions might have put 
upon them the obhgation to admit to some form 
of limited membership any qualified individual 
who appUed. These associations and imions would 
thus secure the status of Approved Societies and 
would become Electoral Colleges for the Trade 
Councils. The associations and unions would then 
become truly representative, and when required 
the real views of an industry could be ascertained 
through them. 

All sorts of difficulties will arise in the settlement 
of this suggested franchise, such questions as the 




right of a limited company to a vote, the position 
of the casual labourer, the extension of the vote to 
unskilled as well as skilled workers, the difficulty 
of the man who is a builder's labourer one day and 
a hop-picker the next. But these are all details, 
which are by no means impossible of adjustment. 
In any case, the trade franchise can have no finahty 
about it. The first arrangement is sure to fail to 
meet with everybody's approval, and as industry 
alters and conditions change, so there will be a 
constant need for adjustment of the qualification 
for the vote. 

When the Trade Council was properly established, 
the unions and associations would still have much 
work left to them. In the first place, they would 
each become a sort of party caucus of the Trade 
Council, but they would, in addition, act as the 
link between the individual trader and the Council. 
Each Trade Councillor would be responsible to 
his association or his imion, and would probably 
have to answer to the Executive for his actions or 
his inactivities. 

B. The Trade Council, 

I -have continually referred throughout this book 
to the need for Trade Councils, and the question 
arises as to how they are to be brought into being. 
It is obvious that this can only be accomplished 
by the Government. 

The necessary Act of Pariiament establishing 
the Ministry of Commerce and the Trade Councils 



would probably be, in the first place, a permissive 

I would give to any association, society, or 
union the right to apply to the Minister of Commerce 
to have its trade brought within the scheme and 
a Trade Council constituted. On receipt of such 
an application, the Minister of Commerce would 
hear the case, and if he were satisfied that the 
appUcants were of sufficient standing, he would 
advertise his intention to set up a Statutory Trade 
Council in that industry. 

Every other union or society having interests 
which would thus be concerned, would then have 
the opportunity of becoming Approved Societies 
for the purposes of the election of the proposed 
Trade Council. The Minister of Commerce would 
then adjust the interests of each of these societies, 
giving to them voting power in proportion to the ^ 
strength of their membership. The voting power 
would be divided into halves, one for capital and 
the other for labour, and would be distributed 
between the employers' associations and the labour 
unions in their proper proportions. The trade 
would thus become a recognised industry in much 
the same way that a parish becomes a borough or 
a borough a city. 

Having adjusted all the interests in the way 
described, the Minister of Commerce would then 
appoint returning officers to direct the election 
of the first Trade Council. 

It will be noticed that one great difficulty has 



been overcome by these processes in connection 
with the selection of trades. For in this way a 
sort of natural selection would develop, and the 
resulting recognised trades would in all probability 
make a very different list from any schedule which 
the authorities might compile of our leading in- 
dustries. For instance, Cotton might have one or 
two Trade Councils. The cotton industry might 
come to the conclusion that it could work better 
with one, or the spinning and weaving branches 
might prefer to work independently. Engineering 
might have twenty Trade Councils, and, indeed, it 
is likely that something of the kind would happen. 
These difficulties which have baffled so many en- 
thusiasts in the federation of so varied an industry 
would be overcome. As new trades arose new 
Trade Councils would become necessary, and as 
the character of trades altered so Trade Councils 
might be amalgamated or reconstituted. 

C. The Minister of Commerce. 

In the foregoing it will be obvious that there 
is a great deal of work which would fall upon the 
shoulders of the Minister of Commerce merely in 
the regularisation of all these proceedings. The 
greatest objection to the appointment of a Minister 
of Commerce would be overcome if his appointment 
were accompanied with the setting up of numerous 
Trade Councils. There would then be no fear that 
the Minister might take upon himself to interfere 
with industry without proper advice. We should 

' •n 



be free from any risk of the repetition of our war- 
time experiences, or of the serious damage resulting 
to trade and commerce through the operations 
of Government Departments. 

The work of the Minister of Commerce would be 
to set up Trade Councils, to regularise their pro- 
ceedings, to supervise the registration for the trade 
franchise, and to give effect to the recommenda- 
tions of Trade Councils and bring those recommenda- 
tions before the notice of other Departments and 
other Governments. He would not be expected 
to initiate trading schemes, or to touch the details 
of trading matters at all. 

The scheme would bring about another great 
improvement in our present arrangements. It 
would clearly define the spheres and activities of 
the official and of the business man. The official 
would have ample scope for the exercise of all his 
abilities at the Ministry of Commerce on work 
which he and he alone could do, while the business 
man would be relegated to the Trade Council, 
where his knowledge and experience would have 
every opportunity for useful work. 

The Ministry of Commerce would, as I have sug- 
gested in "Trade as a Science," divide itself into 
six or seven departments, dealing with the 
main branches of the work of the Trade Councils. 
There would have to be a number of Under 
Secretaries, handling such specialised subjects as 
education, research, export, statistics, finance, wel- 
fare, and exhibitions. Each of these departments 





would endeavour to establish in each Trade Council 
corresponding departments, so that every industry 
would possess a perfect organisation for handling 
these great subjects. In this way the following situa- 
tion would arise in connection with, say, Export. 

There would be at the Ministry of Commerce an 
Export Department and an Export Secretary, 
whose duties would be to co-ordinate the efforts 
of the Export Officers of different trades. There 
would be an Export Committee and an Export 
Officer for every industry, and each industry would 
be able to deal with the problems of exportation 
in a way that would overcome the special difficulties 
of each trade. The efforts of all these Export 
Officers would be co-ordinated and regulated by 
the Central Department at the Ministry of Com- 
merce. We should remove the greatest weakness 
of our present attempts to assist export, the weak- 
ness which arises from deaUng with all trades at once. 

D. Officials of the Trade Council. 

It is obvious that the scheme which we are con- 
sidering involves the appointment of great numbers 
of officials. The suggestion is that every trade 
would require a complete organisation of its own, 
with officials at home and officials abroad. There 
are very few British industries which are not worth 
the undivided attention of an expert selling staff 
in every market abroad. In this way we should 
have in the Argentine fifty different staffs of trade 
experts looking after the interests of fifty different 



trades. It does not follow that there would be 
more men in the Argentine on behalf of British 
trade than there are at the moment, but instead 
of the men who are there being in direct opposition 
to one another, exhibiting the dirty linen of the 
English cpmpetitive system to the gaze of the 
Argentine buyer, we should have the work so re- 
arranged that each man would be able to speak on 
behalf of the whole of the industry in which he was 

There would be no fear of these positions assum- 
ing the character of permanent pubhc appointments, 
or of these officials acquiring the habits of the 
employee in a Government Department. They 
would all be commercial appointments.; they would 
be made by Trade Councils composed of experts; 
they need have no more fixity of tenure or con- 
tinuity about them than the ordinary commercial 
appointment of to-day. In fact, the type of man 
who would apply for most of these positions w^ould 
probably not consent to, or desire, arrangements 
which had any finahty about them. The position 
of representative in Chili for the Boot Trade Council 
would only be accepted by some man of high 
commercial ambition, and would probably be re- 
garded by him as a stepping-stone to something 
else. He would probably require some arrange- 
ment for payment by results, and, indeed, his 
emolument in any case would have to bear some 
relation to the success of his efforts. The higher 
grade of business man, to whom all these posts 



would appeal, is not prepared to be bound, and is 
not looking for a pension, and there is, therefore, 
no reason why any of these offices under Trade 
Councils should be treated in the same way as a 
position in the Treasury or the Post Office. 

E. Finance, 

The Trade Council will, of course, require money. 
This is a subject which I have purposely left un- 
explored. It will be seen that in principle there is 
no reason why the Government should not provide 
the whole of the money that is necessary for the 
running of a Trade Council. If that Council is 
representative of the whole industry, if its object is 
the welfare of all engaged in that industry, if it is 
charged by the Government with the duty of watch- 
ing the national interests in so far as they concern 
that industry, there is a full case for the payment 
by the Treasury of all its expenses. Indeed, a 
good many of the expenses which it would direct 
or control are already paid by the Government. 
Research, education, statistics in the shape of 
Board of Trade Returns, and other similar matters 
which would come under the control of the Trade 
Council, are already provided with public funds. 
But here, again, new conditions would arise, and 
it would in all probability be found that an in- 
dustry would not consent to be entirely dependent 
upon the Minister of Commerce for the funds 
which its Council would control. 

I am inchned to think that finance would not 



in any case prove a barrier to success in these 
matters. Business men are never unwilling to find 
the money for any good scheme. 

In conclusion, I submit the foregoing suggestions 
as a broad, rough basis for the solution of the great 
problem of Industrial Reconstruction. They are 
obviously capable of improvement and indefinite 
amplification, but they represent the lines along 
which we must travel. I can at least clairii that 
my scheme, in principle, if not in detail, overcomes 
many of the difficulties ahead of us. 

(i) It deals with the task in a fundamental 

way, and is not a patchwork or temporary 


(2) It puts the politician, the official, and 

the business man, each in his proper 
sphere, and thus avoids the most dis- 
astrous of our war-time blunders — the 
mixing of the functions of these three 

(3) It renders unnecessary great central 

Government trading schemes which, 
however vast, must always be insigni- 
ficant in relation to the trade of our 

(4) It repairs the inadequacies of our indi- 
vidualistic system without destroying 
its quaUties. 

(5) It ensures a close study by experts of 
every one of our productive trades. 

' i 


each trade as a whole, and provides for 
its fullest development. 

(6) It gives an official status to trade, and 

reheves it of the social stigma which has 
been such a handicap. 

(7) It enlists the sympathies and energies of 

labour on behalf of the nation's trade. 

(8) It removes the feeling of inequality of 

status, which is the main cause of- 
labour unrest. 

(9) It places us in a position to compete 

with other industrial nations. 

(10) It is the embodiment of all that is best 

in the German and American industrial 
scheme, and avoids the abuses of Car- 
tels and Trusts. 

(11) It gives the maximum of opportunity 

for individual effort, and provides a 
chance for every master and workman 
to share in the nation's responsibilities. 

(12) It makes our industries a part of our 

I would not dare to make such claims if I were 
the author of these ideas. But readers will have 
noticed from the numerous quotations I have given 
that many brains have thought these questions 
out, and all that I have done is to endeavour to 
frame from their deliberations and conclusions a 
definite and, as it seems to me, a practical policy 
for British Trade. 

Printed by Jmrrdd &- Sons, Ltd., Norwich, England. 


Date Due 



Ff B ? «^ 1994 






JH^ *■